Question

disinflation _______.
a. occurs when prices decrease over time
b. occurs when the prices for goods and services increase dramatically over a short period of time
c. is a sign of a healthy economy
d. is when the rate of inflation decreases
e. has no impact on prices for goods and services

Explanation:

To solve this, we analyze each option:

• Option A: Deflation is when prices decrease over time, not disinflation. Eliminate A.
• Option B: A dramatic short - term price increase is not disinflation (that's more like hyperinflation - like scenarios). Eliminate B.
• Option C: Disinflation isn't necessarily a sign of a healthy economy; it can have different implications. Eliminate C.
• Option D: Disinflation is defined as a decrease in the rate of inflation (i.e., prices are still rising, but at a slower rate). This matches the definition.
• Option E: Disinflation does impact the rate of price increase (even if prices are still rising, the rate changes), so it has an impact on price dynamics. Eliminate E.

Answer:

D. is when the rate of inflation decreases