When Deflation Occurs

question 131

Multiple Choice

When deflation occurs,

• A)the real interest rate is greater than the nominal interest rate.
• B)the nominal interest rate is greater than the real interest rate.
• C)the nominal interest rate is equal to the real interest rate and inflation is negative.
• D)the nominal interest rate is equal to the real interest rate and inflation is positive.
• E)the real interest rate is positive while the nominal interest rate is negative.

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Definitions:

Contract of Adhesion

A standard form contract prepared by one party, with little or no opportunity for the other party to negotiate more favorable terms.

Superior Bargaining Position

describes a situation where one party has more negotiating power, often due to resources, information, or strategic advantage, influencing the terms of agreements.

Public Policy

Fundamental principles or ideologies concerning what is regarded by the government as being in the public's best interest.

Fraud

Intentional deception made for personal gain or to damage another individual, involving false representation of facts, omission of information, or other deceitful practices.