Persistent fall In the general price level is known as

1. Analyze the question The question asks for the term used when the general price level in an economy keeps falling over a period of time.

2. Explain the concept

• Inflation: a persistent rise in the general price level, so money loses purchasing power.
• Deflation: a persistent fall in the general price level, so money gains purchasing power.
• Devaluation: a deliberate reduction by the government of the official value of its currency against foreign currencies. It is about the exchange rate, not the domestic price level.
• General price increase: this simply describes inflation.

3. Solution, step by step

• The key phrases are "persistent" and "fall in the general price level".
• Option B (devaluation) concerns currency exchange value, so it is out.
• Options C and D both describe a rise in prices, which is the opposite of what the question asks, so both are out.
• Option A (deflation) matches a sustained fall in the general price level.

4. Answer The correct option is A. deflation.

5. Tip Think of the prefix: inflation means prices go up (like a balloon being inflated), while deflation means prices go down (the balloon deflates). Also remember that devaluation concerns the exchange rate, and examiners often use it as a distractor.