Question

Deflation:_____.

a. might easily make both producers and consumers better off because consumers might lose jobs due to falling prices and profit margins, and the falling profit margins would negatively impact producers.
b. automatically implies that, on average, everyone is better off because prices have fallen.
c. would negatively affect producers but positively affect consumers because producers must accept lower prices.
d. automatically occurs when there are more goods with falling prices than there are goods with increasing prices.

Answer 1

Answer: c. would negatively affect producers but positively affect consumers because producers must accept lower prices.

Step-by-step explanation:

Deflation refers to the reduction in the general price level of the goods and the services in an economy. It takes place when inflation rate is below 0%.

Deflation increases the value of a currency. This would negatively affect producers but positively affect consumers because producers must accept lower prices.