Multiple Choice
Cyclical unemployment and recession often arise from changes in which component of the economy?
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1. Introduction to Macroeconomics
Introduction to Economics
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With regard to the economy, the term 'negative inflation' is synonymous with which of the following?
A
Disinflation
B
Stagflation
C
Hyperinflation
D
Deflation
Verified step by step guidance1
Step 1: Understand the meaning of 'negative inflation'. Inflation generally refers to the rate at which the general level of prices for goods and services rises over time. Negative inflation means that prices are falling rather than rising.
Step 2: Review the definitions of the given terms: Disinflation is a decrease in the rate of inflation but prices are still rising; Stagflation is a combination of stagnant economic growth and high inflation; Hyperinflation is an extremely high and typically accelerating inflation rate.
Step 3: Recognize that 'negative inflation' means the inflation rate is below zero, indicating a general decline in prices across the economy.
Step 4: Identify that the term used to describe a sustained decrease in the general price level (negative inflation) is 'Deflation'.
Step 5: Conclude that among the options given, 'Deflation' is the correct synonym for 'negative inflation'.
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