What is the result of an unanticipated period of deflation?
A)a redistribution of income from lenders to borrowers
B)a redistribution of income from workers to employers
C)a redistribution of income from borrowers to lenders
D)a redistribution of income from taxpayers to governments

Question

Quizplus · Accepted Answer

During a period of deflation, prices of goods and services decrease, which can lead to a decrease in the profits of businesses and a decrease in wages for workers. This can also lead to a higher real value of debts for borrowers, which results in a redistribution of income from borrowers to lenders. Lenders benefit as the purchasing power of their earnings and investments increases.

What Is the Result of an Unanticipated Period of Deflation