Consider the following statement about the hypothetical economy of Ninja Island:
ID: 1228169 • Letter: C
Question
Consider the following statement about the hypothetical economy of Ninja Island: From 2000 to 2001, prices continued to rise but at a decreasing rate in this economy. What characteristics must an inflation-time graph contain between 2000 and 2001 in order to be consistent with the previous statement? Check all that apply. The rate of inflation must be positive. The rate of inflation must be negative. The graph must be decreasing. The graph must be increasing. Based on the characteristics you selected, which graph that follows best represents the original statement about the economy of Ninja Island between 2000 and 2001?Explanation / Answer
When price level rises at a decreasing rate, it is known as disinflation.
According to the above statement, between 2000 - 2001
The rate of inflation must be positive and The graph must be decreasing.
The first figure gives us the best representation of the above mentioned statement.