Which of the following statements is true regarding disinflation?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3 i.e. A decrease in the rate of inflation in a specific period.
- Disinflation is a decrease in the rate of inflation or a slowdown in the growth rate.
- It occurs when the increase in the “consumer price level” slows down from the previous period when the prices were rising.
- It is demonstrated by a change in the inflation rate from one year to the next.
- The causes of disinflation are either a decrease in the growth rate of the money supply or a business cycle recession.