What term describes a decrease in the general level of prices?

The term that describes a decrease in the general level of prices is deflation. This occurs when the inflation rate falls below 0%, leading to a decline in the prices of goods and services. Deflation can result from various factors, including reduced consumer demand, increased productivity, or a decrease in the supply of money. Such a decline in prices can have significant economic effects, such as increased purchasing power for consumers, but it may also lead to a decrease in business revenues and economic activity, creating a challenging environment for growth.

In contrast, inflation refers to an overall increase in prices, stagnation describes a period of little to no economic growth or activity, and depreciation usually pertains to a decline in the value of an asset or currency rather than a general price level. Understanding these terms is crucial for analyzing economic conditions and making informed business decisions.