Deflation Ends with

question 78

Multiple Choice

Deflation ends with

• A)an increase in the growth rate of the money stock.
• B)a one-time increase in the quantity of money.
• C)a rise in the interest rate.
• D)a decrease in the growth rate of the money stock.
• E)a one-time decrease in the quantity of money.

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Definitions:

Income Effect

The relationship between changing income in a person's life or the economy and the subsequent demand for certain goods or services.

Perfect Substitutes

Goods for which consumers are willing to replace one for the other at a constant rate, without affecting their level of utility.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute one product for another.

Income Effect

The effect of modifications in earnings for a person or the economy on how much of a good or service is sought after.