An unanticipated deflation does all of the following except
A)redistributes income.
B)redistributes wealth.
C)lowers real GDP.
D)lowers employment.
E)decreases the real wages of workers with long-term wage contracts.

Question

Quizplus · Accepted Answer

Unanticipated deflation increases the real wages of workers with long-term wage contracts because the nominal wages remain the same while the price level falls, increasing the purchasing power of their wages.

An Unanticipated Deflation Does All of the Following Except