How does inflation primarily differ from deflation?
(1 point)
Responses
Inflation tracks changing prices but deflation does not.
Inflation tracks changing prices but deflation does not.
Inflation relates to rising rather than falling prices.
Inflation relates to rising rather than falling prices.
Inflation happens only when the money supply is too small.
Inflation happens only when the money supply is too small.
Inflation occurs much less often than deflation does.
1 answer
Inflation primarily differs from deflation in that inflation relates to rising prices, while deflation relates to falling prices. Inflation occurs when there is an increase in the overall price level of goods and services over a period of time, whereas deflation occurs when there is a decrease in the overall price level. Additionally, inflation can happen regardless of the size of the money supply, whereas the statement that "inflation happens only when the money supply is too small" is not accurate. Finally, inflation occurs less frequently than deflation in most economies.
1 answer