When There Is Deflation

question 44

Multiple Choice

When there is deflation,

• A)the real interest rate rises.
• B)it has no effect on the output gap.
• C)it has no effect on the unemployment rate.
• D)there is decline in real money.
• E)nominal interest rates are negative.

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Definitions:

Purchasing Habits

Patterns or behaviors exhibited by consumers in the process of buying goods and services.