Multiple choice

The process of deplation tends to favour

  1. debtor and creditiors a like

  2. debtor at the expense of creditors

  3. creditors at the expense of debtors

  4. profit receivers at the expense of fixed income receivers
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

During deflation, the price level falls, meaning money gains purchasing power. Creditors benefit because they are repaid in money that is worth more than when it was lent. Debtors suffer because they must repay loans with money that has increased in value.

Keep practicing — related questions