Respuesta :
Answer:
There are deflation in year 5 only, inflation in year 2 only, and disinflation in years 3 and 4.
Explanation:
Deflation occurs when there is a fall in the general price level in an economy which is sustained over a period of time. It is also referred to as a negative inflation because it is evident when the rate of inflation falls below zero percent.
Inflation occurs when there is a rise in the general price level in an economy which is sustained over a period of time.
Disinflation occurs when there is a fall in the inflation rate.
From the question, the following can be obtained:
(1) Year 1 = 100%, no difference.
(2) Year 2 = 104% of year 1, 4% greater than Year 1, this is inflation.
(3) Year 3 = 106% of year 1, 2% greater than year 2, it is less than 4% difference between year 2 and year 1, this is disinflation.
(4) Year 4 = 107% of year 1, 1% greater than year 3, but it is less than 2% difference between year 3 and year 2, this is disinflation.
(5) Year 5 = 105% of year 1, 2% less than year 4 as 105% minus 107% is -2%, this is deflation.
Therefore, there are deflation in year 5 only, inflation in year 2 only, and disinflation in years 3 and 4.
