Which of the following is not a consequence of deflation?
A. Deflation causes uncertainty about the future.
B. The threat of deflation can make people reluctant to borrow for long periods.
C. Deflation causes the real value of money to fall.
D. Firms may be reluctant to undertake investments for fear that the prices at which they can sell their output will drop.
Ans: C. Deflation causes the real value of money to fall.
You might also like to view...
Institutions that channel funds from suppliers of financial capital to users of financial capital are referred to as:
A) deposit insurance committees. B) financial intermediaries. C) central banks. D) mutual funds.
The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60. What is the price elasticity of demand?
A) 1.0 B) 1.25 C) 40.0 D) 20.0 E) 0.80
A nonexclusive good is a good which:
a. is sold in low-price markets. b. is impossible to keep people from enjoying the benefits the good provides. c. is produced by a perfectly competitive firm. d. is produced at the lowest possible cost.
Which of the following statements is not true about a market system?
a. The market system provides an incentive to consumers to acquire purchasing ability. b. The market system magnifies the problem of scarcity of goods and services. c. The market system provides an incentive for allocating resources. d. The market system provides an incentive to improve the quality of goods produced. e. The market system provides everything everyone wants to consume.