Question

If an economy experiences deflation, then the overall price level is increasing. the aggregate price level is declining. the aggregate price level is rising, but not as quickly as it did in the previous year. the prices of all goods in the economy are decreasing. the prices of consumer goods are decreasing while the prices of raw materials are increasing.

Answer 1

Answer:

If an economy experiences deflation, then

the prices of all goods in the economy are decreasing.

Explanation:

Generally, deflation is an economic condition whereby there is a decrease in the general price level of goods and services.  As the opposite of inflation, deflation occurs when the inflation rate falls below 0%.  During deflation, consumers spend less money on goods and services because of the decreasing demand.  This demand drop with increasing supply leads to a general decline in prices, with organizations trying to sell off their inventory.

Answer 2

Answer:

C. An aggregate price level is declining.

Explanation:

literally doing this same assignment right now in ECON2301, C was the right answer on mine