SSC Economics Sample Paper NCERT Sample Paper-2

  • question_answer
    Consider the following statements
    1. In the disinflation the prices are still rising but at a lower rate.
    2. Deflation results into a sustained increase in the real value of money and other monetary items. Which of the statements given above is/are correct?

    A) Only 1  

    B) Only 2

    C) Both 1 and 2     

    D) neither 1 nor 2

    Correct Answer: C

    Solution :

    When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money - a loss of real value in the medium of exchange and unit of account within the economy. Deflation works on the opposite.

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