During periods of deflation _____ will be hurt and _____ will be helped.
A) firms; borrowers
B) borrowers; lenders
C) consumers; firms
D) home buyers; home sellers

Question

Quizplus · Accepted Answer

During periods of deflation, borrowers will be hurt because the value of the dollar increases, making it harder to pay back loans. Lenders, on the other hand, will be helped because the real value of their loan increases. Firms may also be hurt because the price of their goods and services decreases, leading to lower profits. Consumers may benefit from lower prices, but if they are also borrowers, the negative effect on their loan payments may offset any benefits. Home buyers and home sellers may not be directly affected by deflation.

During Periods of Deflation _____ Will Be Hurt and _____

During Periods of Deflation _ Will Be Hurt and _