Which of the Following Is NOT a Potential Problem with Deflation

question 61

Multiple Choice

Which of the following is NOT a potential problem with deflation?

• A) Interest rate falls will over- stimulate the economy.
• B) Expectations of future price falls can cause a fall in aggregate demand.
• C) Debt burdens may rise as prices fall.
• D) Employment levels may fall.

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Definitions:

Type II Error

A statistical error occurring when the null hypothesis is not rejected when it actually is false.

Type II Error

The error that occurs when a statistical test fails to reject a false null hypothesis, mistakenly indicating that a difference or effect does not exist.

Two-Tailed

Refers to a hypothesis test where the area of interest spans both tails of the distribution, allowing for testing of differences in both directions.

One-Tailed

A hypothesis test where the area of interest is only on one side of the distribution, testing for a direction-specific outcome.