When Japan experienced deflation in the 1990s and 2000s, Japan's
A) capital stock grew more rapidly that during the decades that Japan experienced inflation..
B) real wage rate fell.
C) investment decreased so that its capital stock grew more slowly.
D) money growth rate soared.

Question

Quizplus · Accepted Answer

During the deflationary period in Japan in the 1990s and 2000s, investment decreased, leading to a slower growth in the capital stock. Deflation often leads to reduced consumer spending, as people expect prices to fall further, which can reduce business revenues and lead to lower levels of investment in capital.

When Japan Experienced Deflation in the 1990s and 2000s, Japan's