Deflation
A) Increases incomes and enhances the ability of debtors to pay off their debts.
B) Increases incomes and reduces the ability of debtors to pay off their debts.
C) Decreases incomes and enhances the ability of debtors to pay off their debts.
D) Decreases incomes and reduces the ability of debtors to pay off their debts.

Question

Quizplus · Accepted Answer

Deflation decreases the overall level of prices, which decreases consumer demand and can lead to lower incomes for producers. This can make it harder for debtors to pay off their debts.