When Deflation Occurs

question 252

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.

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Definitions:

Oligopoly

A market structure characterized by a small number of firms controlling a large majority of the market share, often leading to limited competition.

Structural Unemployment

People who remain unemployed for long periods of time, often with little hope of finding new jobs like their old ones.

Specialized Knowledge

Expertise or skills focused on a specific branch of study, occupation, or field of endeavor, distinguished by its depth and proficiency.

Cost-Push Inflation

Inflation caused by an increase in prices of inputs like labour, raw material, etc., leading to a decrease in the supply of these goods.