Deflation Occurs When

question 31

Multiple Choice

Deflation occurs when

• A) the average price level declines.
• B) economic activity declines.
• C) the economic growth rate declines.
• D) the unemployment rate declines.

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Definitions:

Producer Surplus

Producer surplus is the difference between what producers are willing to sell a good for and the actual price they receive.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from the trading of goods or services.

Equilibrium Price

The market price at which the quantity of a good demanded equals the quantity supplied, leading to a stable market condition.

Equilibrium Quantity

The quantity of goods or services supplied is equal to the quantity demanded at the market equilibrium price.