Question

Which of these is a side effect of deflation?

(a)Decreasing unemployment

(b) Increase in demand

(c) Economic depression

(d) Increase in personal expenditure.
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Answer 1

Answer:

decreasing unemployment

Answer 2

Deflation incentivises people to hoard cash because they can buy relatively more with a dollar in the future than now - this has negative feedback loops that can lead to economic depression

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