If There Is Too Much Deflation

question 116

Multiple Choice

If there is too much deflation:

• A) people will switch from money to real assets.
• B) the nominal interest rate will be constrained by the zero interest rate bound.
• C) lenders will be harmed.
• D) aggregate demand will increase.

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Definitions:

GST

Goods and Services Tax, a value-added tax imposed on most goods and services sold for domestic consumption.

PST

PST stands for Provincial Sales Tax, which is a tax levied by individual provinces in Canada on the sale of goods and services.

Property Taxes

It is a levy imposed by a government on a property owner, usually based on the value of the property.

Mill Rate

The amount of tax payable per dollar of the assessed value of property, used in calculating property taxes.