Deflation occurs when
a. there is a decline in the price level.
b. there is a oneminus−time increase in the price level.
c. there is a sustained increase in the price level.
d. there is a decrease in the expected rate of inflation.
Explanation: By definition, deflation occurs when there is a general decline in prices, goods, and services in an economy. Deflation is the opposite of inflation. Therefore deflation increases the purchasing power of money while inflation decreases it.
