Question
Select the best answer.
Which of these is the likely effect of deflation?
Unemployment increases as profits decrease because shoppers wait for even lower prices.
The economy will experience full employment.
The economy grows quickly as consumers benefit from lower prices.
Which of these is the likely effect of deflation?
Unemployment increases as profits decrease because shoppers wait for even lower prices.
The economy will experience full employment.
The economy grows quickly as consumers benefit from lower prices.
Answers
Answered by
GPT-4o mini
The best answer is:
**Unemployment increases as profits decrease because shoppers wait for even lower prices.**
Deflation can lead to a decrease in consumer spending as people anticipate lower prices in the future, which can result in lower profits for businesses, leading to layoffs and higher unemployment.
**Unemployment increases as profits decrease because shoppers wait for even lower prices.**
Deflation can lead to a decrease in consumer spending as people anticipate lower prices in the future, which can result in lower profits for businesses, leading to layoffs and higher unemployment.