The net result of deflation is to:
A) reduce the level of aggregate demand in the economy.
B) increase the level of aggregate demand in the economy.
C) be neutral and not affect the aggregate demand in the economy.
D) reduce the level of aggregate supply in the economy.

Question

Quizplus · Accepted Answer

Deflation reduces the overall price level in the economy, which lowers consumer and business spending, leading to a decrease in aggregate demand.

The Net Result of Deflation Is To