Deflation
A) automatically implies that,on average,everyone is better off because prices have fallen.
B) is the same as disinflation; it means the rate of inflation has fallen.
C) will make you better off if your nominal wages fall more slowly than prices.
D) will make you better off if your nominal wages fall more rapidly than prices.
E) will make you better off if your real wages fall more rapidly than prices.

Question

Quizplus · Accepted Answer

Deflation means a general decline in prices, which can be beneficial for consumers who can purchase goods and services at lower prices. However, deflation can also have negative effects on an economy such as an increase in unemployment and a decrease in economic growth. In terms of wages, if nominal wages (the amount of money you make) fall more slowly than prices during a deflationary period, your purchasing power will increase and you will be better off. This is because with constant or increasing real wages (nominal wages adjusted for inflation/deflation), you can buy more goods and services at lower prices.