Question

Which of the following indicators provides the clearest indication that an economy is experiencing deflation?

A. A decrease in the unemployment rate.
B. A decrease in GDP.
C. An increase in the PPI.
D. A decrease in the CPI.

Answer 1

D. A decrease in the CPI.

Answer 2

The correct option is D

Step-by-step explanation:

The Consumer Price Index examines the average prices of consumer goods and services e.g transportation, food, medical etc. This CPI is the most used indicator in identifying periods of inflation and deflation.