An unexpected deflation can change demand by redistributing wealth from:
A) creditors to debtors, thus raising consumption.
B) creditors to debtors, thus lowering consumption.
C) debtors to creditors, thus lowering consumption.
D) debtors to creditors, thus raising consumption.

Question

Quizplus · Accepted Answer

Unexpected deflation increases the real value of money, benefiting creditors who are repaid in money that is now worth more. This typically reduces overall consumption because debtors, who are generally more likely to spend, have less wealth.

An Unexpected Deflation Can Change Demand by Redistributing Wealth From