When inflation is negative it:
A) raises the demand for investment.
B) increases the positive output gap.
C) has no effect on the unemployment rate.
D) increases the growth of money.
E) is called disinflation.

Question

Quizplus · Accepted Answer

Negative inflation, which is a decrease in the general price level over time, can lower the cost of borrowing and potentially raise the demand for investment as businesses and individuals find it cheaper to finance new projects or purchases.

When Inflation Is Negative It