Praxis Core Academic Skills for Educators – Mathematics (5123) Practice Exam

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If prices fall during deflation, which of the following is most accurate?

Prices decline

Deflation means a general decrease in the overall price level across the economy. So, during deflation the most accurate statement is that prices decline. Inflation is when prices rise, so that wouldn’t match deflation. If prices stayed the same, there would be no deflation at all. Fluctuating unpredictably isn’t the defining pattern of deflation, which is a persistent downward trend. As prices fall, money buys more goods and services, illustrating why the overall price level is moving downward.

Prices rise

Prices stay the same

Prices fluctuate unpredictably

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