Deflation occurs when
A)there is a sustained increase in the price level.
B)there is a one-time increase in the price level.
C)there is a decline in the price level.
D)there is a decrease in the expected rate of inflation.

Question

Quizplus · Accepted Answer

Deflation occurs when there is a sustained decline in the price level, meaning that prices are generally decreasing over time. This is different from a one-time increase in the price level, which would be inflation. A decrease in the expected rate of inflation (D) would not necessarily result in deflation, but rather slower inflation.

Deflation Occurs When