If there is too much deflation:
A) people will switch from money to real assets.
B) the nominal interest rate will be constrained by the zero interest rate bound.
C) lenders will be harmed.
D) aggregate demand will increase.

Question

Quizplus · Accepted Answer

Deflation can lead to a situation where nominal interest rates are at or near zero, limiting the central bank's ability to stimulate the economy through monetary policy.

If There Is Too Much Deflation