ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Disinflation is a decrease in the rate of inflation – a slowdown in the rate of increase of the general price level of goods and services in a nation’s gross domestic product over time. It is the opposite of reflation.

Detailed explanation-2: -Disinflation is used to describe the slowing of price inflation. In other words, it is a decrease in the rate of inflation. The term should not be confused with deflation, which is used to describe a negative inflation rate.

Detailed explanation-3: -Key Takeaways. Inflation is an increase in the general prices of goods and services in an economy. Deflation, conversely, is the general decline in prices for goods and services, indicated by an inflation rate that falls below zero percent.

Detailed explanation-4: -Causes of this shift include reduced government spending, stock market failure, consumer desire to increase savings, and tightening monetary policies (higher interest rates). Falling prices can also happen naturally when the output of the economy grows faster than the supply of circulating money and credit.

Detailed explanation-5: -In contrast, disinflation, represents a period when the inflation rate is positive, but declining over time. Deflation, inflation, and disinflation represent different behavior of the price level.