Deflation
A)increases incomes and enhances the ability of debtors to pay off their debts.
B)increases incomes and reduces the ability of debtors to pay off their debts.
C)decreases incomes and enhances the ability of debtors to pay off their debts.
D)decreases incomes and reduces the ability of debtors to pay off their debts.

Question

Quizplus · Accepted Answer

Deflation decreases incomes and reduces the ability of debtors to pay off their debts as goods and services become cheaper and there is a decrease in demand. This results in lower profits for businesses and lower wages for workers, making it harder for debtors to repay their debts.