The decline in net worth that can result from an unanticipated decline in the price level is known as ________.

Question

Quizplus · Accepted Answer

A decline in the price level can reduce the value of assets, leading to a debt deflation. This can result in a decrease in net worth for individuals, businesses, and even the overall economy. A credit boom refers to a sudden and excessive increase in credit, deleveraging refers to a reduction in debt, and federal funds rationing refers to the allocation of excess reserves in the banking system. None of these directly relate to the decline in net worth resulting from a decrease in the price level.

The Decline in Net Worth That Can Result from an Unanticipated