Excessive Inflation or Deflation

question 196

Multiple Choice

Excessive inflation or deflation

• A) interferes with the price mechanism that brings a market to equilibrium.
• B) can be beneficial in the long run.
• C) has a neutral effect on the market.
• D) has a negative effect on the economy only if traders are aware of it.

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Definitions:

Transformation

In chemistry, it refers to a change in the chemical structure of a molecule through a chemical reaction.

Equilibrium

A state in a chemical reaction where the rates of the forward and reverse reactions are equal, leading to stable concentrations of reactants and products.

Concentration

Concentration refers to the amount of a substance per defined space; it is a measure of how much of a solute is dissolved in a specific amount of solvent.

Exothermic

Describes a chemical reaction that releases heat into its surroundings.