Why Is Deflation Undesirable

question 91

Multiple Choice

Why is deflation undesirable?

• A)Because it causes a fall in real incomes.
• B)Because it causes a fall in tax revenues.
• C)Because it causes consumers to overspend.
• D)Because it causes consumers to postpone spending.

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Definitions:

Dishonored Note

A promissory note that has not been paid by the maker at its maturity date.

Calculating Interest

The process of determining the cost of borrowing money or the gain from lending money, usually expressed as a percentage of the principal amount per period.

Note Receivable

A written promise that one party will pay a specific sum of money to another party at a future date.

Journalize Transactions

The process of recording financial transactions in a company's accounting records or journal.