When the rate of in?ation in an economy is low, _____ in order to avoid de?ation.
A) the government has to reduce spending
B) the central bank has to raise interest rates
C) the central bank has to cut interest rates
D) the government has to increase taxes

Question

Quizplus · Accepted Answer

When the rate of inflation is low, the central bank may cut interest rates to stimulate borrowing and spending, which can help avoid deflation by encouraging economic activity.

When the Rate of In?ation in an Economy Is Low