Which of the following is an effect of de?ation?
A) It makes borrowers worse off.
B) It increases the nominal value of assets like stocks and bonds.
C) It reduces the purchasing power of money.
D) It increases the costs of production.

Question

Quizplus · Accepted Answer

Deflation increases the real value of money over time, meaning that the same amount of money can buy more goods and services. This is beneficial for savers but harmful for borrowers, as the real value of their debt increases, making them worse off. Choices B, C, and D describe effects that are not associated with deflation but rather with inflation or other economic phenomena.

Which of the Following Is an Effect of De?ation