Question

What is Reflation?

A Increase in the general price level of goods and services Correct Answer Incorrect Answer
B The act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle. Correct Answer Incorrect Answer
C Situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high Correct Answer Incorrect Answer
D The situation when there is inflation in some commodities, deflation in others Correct Answer Incorrect Answer
E None of these Correct Answer Incorrect Answer

Solution

Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle. It is the opposite of disinflation, which seeks to return the economy back down to the long-term trend. Stagflation is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high. Skewflation refers to inflation in some commodities, deflation in others Deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate).

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