Disinflation may cause
A) an increase in the value of gold, silver, and gems.
B) a reduced required return demanded by investors on financial assets.
C) additional profits through falling inventory costs.
D) None of these.

Question

Quizplus · Accepted Answer

Disinflation results in a decrease in the rate of inflation. As a result, investors may reduce the required return demanded on financial assets since they do not need to adjust for as much inflation. This can lead to lower interest rates and cheaper loans. However, disinflation does not necessarily impact the value of precious metals or lead to additional profits through falling inventory costs.

Disinflation May Cause