Final answer:
Determining if postponing her purchase was a good trade-off for Dorothy depends on whether there was inflation or deflation during that period. In a deflationary period, her money could buy more over time, but debts would become more expensive.
Step-by-step explanation:
From a financial standpoint, determining whether postponing her purchase was a good trade-off for Dorothy requires analyzing the effects of inflation and deflation on her purchasing power and the cost of goods. Based on the information given regarding the phenomenon of deflation, where the value of currency increases over time, and inflation, which causes a decrease in the purchasing power of money, we can infer that it may not have been a beneficial trade-off for Dorothy to postpone her purchase if deflation was occurring at the time.
Deflation increases the value of currency, so saving might appear beneficial. However, if she had debt or was planning to take on debt, the deflation would have meant repaying loans with more valuable dollars, making her initial postponement less appealing financially.
On the other hand, with inflation, the purchasing power of cash savings decreases over time, and those with financial capital benefit from repaying loans in dollars that are worth less than when the loan was taken out. If Dorothy was postponing a purchase during a time of inflation, and she put her money into a savings account with a lower interest rate than the inflation rate, she would end up with a negative real rate of return. Her savings would not have covered the increased costs due to inflation, thus making the postponement a poor financial decision.
In conclusion, depending on the timing and economic situation—specifically, whether deflation or inflation was occurring—both could impact whether Dorothy's decision to postpone her purchase was financially beneficial. Furthermore, since there is no mention of the interest rate on her savings as being higher than the rate of inflation or deflation, it remains unclear whether her savings alone could have covered the increased cost of the dishwasher over time, ultimately affecting her financial decision-making.