Deflation Is a Problem Because

question 158

Multiple Choice

Deflation is a problem because:

• A) the rate of inflation,though still positive,is getting lower.
• B) the dollar loses purchasing power.
• C) debt becomes easier to pay off.
• D) it takes more purchasing power to make interest payments or pay off debt.

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Definitions:

Transfer Payments

Payments made by the government to individuals without any expectation of goods or services in return, such as welfare or social security.

Redistribution Programs

Government policies designed to redistribute income and wealth from wealthier segments of society to poorer ones, often through taxation, welfare, and public services.

Human Capital

The economic value of a worker's experience and skills, including education, training, intelligence, and health, influencing productivity and earning potential.

Economic Income

Comprises the total earnings from work, investments, and other sources, after considering inflation and changes in purchasing power over time.