Question : Which of the following statements is true regarding disinflation?
Option 1: A scenario when inflation is mainly due to inflation of only a few commodities and not of all commodities.
Option 2: An overall decrease in prices over a specific period.
Option 3: A decrease in the rate of inflation in a specific period.
Option 4: A sudden sharp decrease in prices due to unexpected reasons.
Correct Answer: A decrease in the rate of inflation in a specific period.
Solution : The correct answer is 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 rate of increase in the prices of goods and services in a country. Generally, we can say it is the opposite of inflation. Whereas deflation is a decrease in the overall price level of goods and services. Disinflation is a temporary slowdown of the pace of price inflation.
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