Which of the following is not a potential problem with deflation?
A)Debt burdens may rise as prices fall.
B)Asset values will fall.
C)Unemployment rates may rise.
D)Expectations of future price falls may cause a rise in aggregate demand.

Question

Quizplus · Accepted Answer

Expectations of future price falls may actually stimulate spending as consumers may delay purchasing goods in hopes of obtaining a lower price, which increases aggregate demand. However, A, B, and C are all potential problems with deflation.

Which of the Following Is Not a Potential Problem with Deflation