According to Keynes, Why Might Deflation Create Problems for an Economy

question 63

Multiple Choice

According to Keynes, why might deflation create problems for an economy?

• A)Consumers might expect prices to fall further and cut back consumption now.
• B)In expectation of increased spending, too many entrepreneurs would begin businesses and most would fail.
• C)Producers might increase production to take advantage of falling input prices.
• D)People would drop out of unions because unions would become ineffective at keeping wages of members high.

---

Definitions:

Periclean Athens

The period in Ancient Greek history during the leadership of Pericles, noted for its political democracy, cultural achievements, and building projects.

Augustus

Latin, “majestic” or “exalted.”

Monuments

Structures erected to commemorate a notable person, event, or concept; they serve as historic markers or artistic symbols.

Apotheosis

The elevation of a person or thing to divine status, or a perfect example or ultimate expression of a concept.