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:

Dorsal Spinothalamic Tract

A pathway in the spinal cord that transmits touch and proprioceptive information from the body to the thalamus in the brain.

Referred Pain

Pain that arises in one of the internal organs but is felt on the surface of the body.

Internal Organs

The group of organs located within the main cavities of the body, such as the heart, lungs, liver, and kidneys, essential for various bodily functions.

Rapidly Adapting Receptor

Body sensory receptor that responds briefly to the onset of a stimulus on the body.