An economy reports the following annual percentage change in its general price level over a three-year period:

• Year 1: +5.0%
• Year 2: +2.0%
• Year 3: -1.0%

Based on this data, which statement accurately describes the economic situation occurring between the end of Year 1 and the end of Year 2?

Analyzing Price Level Data

Match each economic term with the scenario that best describes it, based on changes in a country's general price level.

If a country's annual rate of price increase slows from 4% in one year to 1% in the next year, it means the general level of prices has fallen.