A real increase in debt burdens caused by falling wages and prices is a
A)debt inflation.
B)falling debt-to-income ratio.
C)debt deflation.
D)moral hazard.

Question

Quizplus · Accepted Answer

A real increase in debt burdens caused by falling wages and prices is referred to as debt deflation. This occurs when the value of assets, including property and investments, decreases and the level of debt remains the same, leading to an increase in the real burden of debt. It often leads to a vicious cycle of falling prices, increasing unemployment, and further drops in demand, causing economic contractions or even recessions.

A Real Increase in Debt Burdens Caused by Falling Wages