contestada

Which of the following is a problem with deflation?
A. There is no problem with deflation; falling prices are good for the economy.
B. Stopping it will cause a recession.
C. It raises the real cost of debt repayment.
D. It causes people to pay more taxes.

Respuesta :

Answer:C - It raisesthe real cost of debt repayment

Explanation: Deflation is a persistent fall in general price level.

When there's deflation, the interest rate rises and this increases the cost of debt repayment.

Deflation is usually associated with a recessionary period where there is a negative GDP and high level of unemployment. Deflation isn't a postive occurrence.

Otras preguntas