What Is the Difference Between Disinflation and Deflation

question 26

Multiple Choice

What is the difference between disinflation and deflation?

• A) Disinflation is a slower increase in prices, whereas deflation is a decrease in prices.
• B) Deflation is a slower increase in prices, whereas disinflation is a decrease in prices.
• C) The Fed can engineer disinflation, but not deflation.
• D) There is no difference between disinflation and deflation.

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Definitions:

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.

Simple Interest

Interest calculated only on the principal amount, or the initial amount of money borrowed or invested, without compounding.

GICs

A financial vehicle in Canada, Guaranteed Investment Certificates offer investors a set return rate over a defined period.

Simple Interest

Interest calculated on the principal or original amount of a loan or investment, without compounding.