Which Statement Is TRUE About Inflation and Deflation

question 7

Multiple Choice

Which statement is TRUE about inflation and deflation?

• A) Both are good for the economy.
• B) Inflation is always good for the economy and deflation is always bad for the economy.
• C) Inflation is always bad for the economy and deflation is always good for the economy.
• D) Both inflation and deflation can pose problems for the economy.

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Definitions:

Market Rate

The current price at which an asset or service can be bought or sold in a given market.

Quoted

The stated price or rate for a financial instrument or commodity in the marketplace.

Bond

A fixed-income investment in which an investor loans money to an entity (corporate or governmental) which borrows the funds for a defined period at a variable or fixed interest rate.

Sell

To sell means to exchange a product or service for money or other goods.