UPSC Prelims 2010·GS1·economy·basic concepts

Which one of the following statements is an appropriate description of deflation?

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Last updated 23 May 2026, 3:31 pm IST
  1. AIt is a sudden fall in the value of a currency against other currencies
  2. BIt is a persistent recession in both the financial and real sectors of economy
  3. CIt is a persistent fall in the general price level of goods and servicesCorrect
  4. DIt is a fall in the rate of inflation over a period of time

Explanation

Deflation is defined as a sustained or persistent decrease in the general price level of goods and services in an economy over a period of time. It occurs when the inflation rate falls below zero percent, resulting in an increase in the purchasing power of money. Option A refers to currency depreciation or devaluation. Option B describes a deep economic depression. Option D describes disinflation, which is a slowdown in the rate of inflation rather than a negative inflation rate. Therefore, Option C is the only accurate description of deflation.
economy: Which one of the following statements is an appropriate description of deflation?
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