Which of the following is a difference between inflation and deflation?
A. The Federal Reserve buys government securities when inflation is a concern, whereas the Federal Reserve sells government securities when deflation is a concern.
B. Inflation increases the unemployment rate, whereas deflation decreases the unemployment rate.
C. A high level of inflation is bad for the economy, whereas a high level of deflation signifies a healthy economy.
D. Inflation is a period of rising average prices across an economy, whereas deflation is a period of falling average prices across the economy.
Answer: D
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