Deflation Occurs When

question 14

Multiple Choice

Deflation occurs when:

• A) real GDP decreases.
• B) the unemployment rate decreases.
• C) prices fall.
• D) prices increase, but at a slower rate.

---

Definitions:

Inverted-U Theory

A theoretical concept suggesting that a variable's effect on a particular outcome increases to a point but then begins to decrease as the variable continues to increase.

Market Structures

The organizational and other characteristics of a market that significantly affect the nature of competition and pricing within that market.

Retained Earnings

The portion of net income that is kept by the company instead of being paid out as dividends to its shareholders.

Venture Capital

Financing provided by investors to startup companies and small businesses with strong growth potential.