Question

What are the signs of low inflation? Choose three correct answers.
Responses

Prices continue to decrease.
Prices continue to decrease.

The economy stagnates and struggles.
The economy stagnates and struggles.

Prices continue to increase.
Prices continue to increase.

Demand steadily rises.
Demand steadily rises.

Demand steadily falls.
Demand steadily falls.

The economy grows in a healthy way.
The economy grows in a healthy way.

Answer 1

Correct answers:
- Prices continue to increase. — Low inflation means prices are rising, but only slowly (not falling or rapidly accelerating).
- The economy stagnates and struggles. — Weak demand and slow growth often accompany low inflation or disinflation.
- Demand steadily falls. — Falling aggregate demand puts downward pressure on price growth, producing low inflation.