Question

Consider the following statements:
(1) Disinflation is a decrease in the rate of inflation.
(2) In the disinflation, the inflation is falls below the zero percent level.
Which of the statements given above is/are correct?

• A. Only 1
• B. Only 2
• C. Both 1 and 2
• D. Neither 1 nor 2

Answer 1

The correct option is A Only 1

Disinflation is the fall in the rate of inflation, however, it does not fall below 0%. It just drops to levels lower than the level of inflation in the previous year and it is termed as disinflation.