Which of the following statements are correct regarding lsquo Disinflation rsquo 1 Reduction in the ...........

Economic Affairs Inflation

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Which of the following statements are correct regarding ‘Disinflation’?

1. Reduction in the rate of inflation is called disinflation.

2. During disinflation the prices of commodities always goes down.

Select the code from following:

1 only

2 only

Both

None

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Explanation:

Disinflation
Disinflation means decrease in the rate of inflation. For example the rate of inflation decreasing from 6% to 3%. It means that if prices were increasing at 6%, now they will increase at 3%.
Reduction in the level of prices means negative inflation. This is called Deflation and not disinflation.
Think
•Deflation
•Depreciation
•Devaluation