Question

What are the signs of low inflation? Check all that apply.

Demand steadily rises.
Demand steadily falls.
Prices continue to increase.
Prices continue to decrease.
The economy grows in a healthy way.
The economy stagnates and struggles.

Answer 1

Check:
- Prices continue to increase.
- The economy grows in a healthy way.

Don't check:
- Demand steadily rises. (Rising demand tends to push inflation up.)
- Demand steadily falls. (Falling demand is more a sign of disinflation or risk of deflation, not steady low positive inflation.)
- Prices continue to decrease. (That is deflation, not low inflation.)
- The economy stagnates and struggles. (Stagnation is more associated with very low inflation or deflation risks, rather than a normal low-but-positive inflation rate.)