An economy records an annual CPI inflation rate of 5.6% in Year 1. In Year 2, the inflation rate falls to 2.1%, and in Year 3, it is -0.8%. Which of the following statements is correct?
The economy experienced disinflation between Year 1 and Year 2, and deflation in Year 3.
The economy experienced deflation between Year 1 and Year 2, and disinflation in Year 3.
The general price level fell between Year 1 and Year 2, and fell further in Year 3.
The general price level rose between Year 1 and Year 2, and rose at a slower rate in Year 3.
77 exam-style questions on OCR A Level Economics Inflation. Each one has a worked solution and a mark scheme showing where the marks go.