One of the Problems with Deflation Is That It

question 204

Multiple Choice

One of the problems with deflation is that it

• A) increases the real value of existing debt.
• B) decreases the real value of existing debt.
• C) shifts the aggregate demand curve to the right.
• D) shifts the aggregate supply curve to the right.

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Definitions:

Opportunity Cost

Opportunity cost represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Cash Flow Operations

The net amount of cash and cash-equivalents being transferred into and out of a business, specifically from its operational activities.

Tax Shield Approach

A method used in finance to reduce taxable income by properly deducting expenses like mortgage interest, which decreases overall taxes owed.

Operating Cash Flows

The amount of cash generated by a company's regular business operations.