WBCS.LIVE practice question

In macroeconomics, what exactly does the term "Disinflation" represent?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. A decrease in the overall rate of inflation.
  2. A sustained decrease in the general price level of goods.
  3. High inflation occurring alongside high unemployment.
  4. A sudden increase in prices strictly due to supply chain shocks.

Correct answer and explanation

Correct answer: A decrease in the overall rate of inflation.

Explanation: āœ… Correct Answer: A) A decrease in the overall rate of inflation. šŸ“š Explanation: Disinflation refers to a temporary slowing of the pace of price inflation within an economy. Unlike deflation, which is a negative inflation rate leading to actual falling prices, disinflation simply means prices are still rising but at a slower rate. It is often the direct result of a contractionary monetary policy implemented by a central bank.