All of the Following Statements About Deflation,except One,are True

question 44

Multiple Choice

All of the following statements about deflation,except one,are true.Which is the exception?

• A)It is characterized by interest rates at zero or near zero.
• B)Apart from one year,it has not occurred in Canada since the Great Depression.
• C)It means that a return on idle money is possible.
• D)It encourages consumers to postpone major purchases.
• E)It encourages large-scale investment in the economy.

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Definitions:

Speculative Bubble

A situation in financial markets where the price of an asset rises significantly higher than its intrinsic value, driven by exuberant market behavior.

Fundamental Value

refers to the intrinsic worth of a company, stock, or asset based on underlying financial and economic factors.

Adverse Selection

The tendency for the mix of unobserved attributes to become undesirable from the standpoint of an uninformed party

Diversification

A risk management strategy that involves spreading investments across various financial assets, industries, or other categories to minimize exposure to any single risk or volatility.