If the Economy Unexpectedly Went from Inflation to Deflation

question 31

Multiple Choice

If the economy unexpectedly went from inflation to deflation,

• A)both debtors and creditors would have reduced real wealth.
• B)both debtors and creditors would have increased real wealth.
• C)debtors would gain at the expense of creditors.
• D)creditors would gain at the expense of debtors.

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Definitions:

Principal

The main party to a transaction or contract, such as a company, individual, or entity, which has authorized others to act on its behalf.

Agent

A person or entity authorized to act on behalf of another person or entity (the principal), typically within the scope of business or legal matters.

Indemnify The Agent

To protect the agent against losses, damages, or liabilities arising from their actions while performing their duties.

Tort Liability

Legal responsibility arising from a civil wrong or injury that does not involve a contract breach, leading to legal liability.