Imagine this scenario: the inflation rate has fallen from 4 percent to 1 percent. How would you label this change in price level?

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Social Studies

Ibarra

20 January, 23:23

Imagine this scenario: the inflation rate has fallen from 4 percent to 1 percent. How would you label this change in price level?

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Moises Carney · Answer 1

If inflation rate fell to 4% and drops to 1%, there is a disinflation. It happens when the inflation rate slows down and makes a decrease of product prices using the gross domestic product as the basis. A deflation comes when it goes to 0%.