**Question 14: Deflation Effects**Deflation is described as a decreasing average level of prices or a negative rate of inflation. If deflation is considered the converse or opposite of inflation, then:a. There would be no income redistribution effects of deflation.b. Creditors would benefit at the expense of debtors.c. Those on fixed incomes would benefit at everyone else’s (or the rest of the world’s) expense.d. Both b) and c) are correct.

There is an inverse relationship between the price level prevailing in the economy and the value of…

14. Deflation is a falling average level of prices or a negative rate of inflation. If deflation is the converse/opposite of inflation a. There would be no income redistribution effects of deflation. b. Creditors would benefit at the expense of debtors. c. Those on fixed incomes would benefit at everyone else's (rest of world's) expense. d. Both b) and c) are correct.

14. Deflation is a falling average level of prices or a negative rate of inflation. If deflation is the converse/opposite of inflation a. There would be no income redistribution effects of deflation. b. Creditors would benefit at the expense of debtors. c. Those on fixed incomes would benefit at everyone else's (rest of world's) expense. d. Both b) and c) are correct.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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