Which of the following accurately describes disinflation?

Question

Quizplus · Accepted Answer

Disinflation is a reduction in the rate of inflation (i.e., prices are still increasing, but at a slower rate) or a temporary decline in the level of prices before they start increasing again. It is often used to describe a reduction of the inflation that has become embedded in expectations, as opposed to a deflationary spiral (a persistent decrease in the general price level). Therefore, option C accurately describes disinflation. Options A and D are incorrect because disinflation does not necessarily involve a decline in the price level or a gradual reduction in prices over time. Option B is incorrect because an increase in the inflation rate does not describe disinflation.

Which of the Following Accurately Describes Disinflation