Inflation, which is an increase in the general level of prices, is generally considered as a very

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Inflation, which is an increase in the general level of prices, is generally considered as a very negative phenomenon. Milton Friedman, for example, used to compare it to alcoholism. Therefore, what does the term that sounds like the opposite of inflation, deflation, mean? Should it be always welcome?

a. Deflation is just a mild form of inflation.

b. Deflation means a zero level of inflation—the prices do not change and remain the same over a period of time.

c. Deflation is a decrease in the general level of prices.

Source: https://www.minneapolisfed.org/publications/the-region/ interview-with-milton-friedman [01.11.15]

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Economics

ISBN: 9781292430645

8th Global Edition

Authors: R. Glenn Hubbard, Anthony P. O'Brien

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