The debt-deflation theory of the Great Depression suggests that an ______ deflation redistributes wealth in such a way as to ______ spending on goods and services.
A) unexpected; reduce
B) unexpected; increase
C) expected; reduce
D) expected; increase

Question

Quizplus · Accepted Answer

The debt-deflation theory, associated with economist Irving Fisher, posits that unexpected deflation increases the real value of debt, leading debtors to cut back on spending to service their debts, thereby reducing overall demand for goods and services.

The Debt-Deflation Theory of the Great Depression Suggests That an ______