A collapse in Buldovia's banking system eventually led to companies unable to borrow money to run their businesses. Firms terminated employees. These circumstances cut into consumer's purchasing power, causing a severe decline in the prices of goods and services, better known as _______.
A) disinflation.
B) deflation.
C) contra inflation.
D) overproduction.

Question

Quizplus · Accepted Answer

The severe decline in prices of goods and services due to the collapse in the banking system and termination of employees is better known as deflation. Disinflation refers to a decrease in the rate of inflation, contra inflation is not a commonly used term, and overproduction refers to a situation where too many goods are produced, leading to a surplus and decreased prices.

A Collapse in Buldovia's Banking System Eventually Led to Companies