Less spending, less borrowing along with low prices of Goods and services usually draw an economy near ___________*1 pointa. Deflationb. Recessionc. Depressiond. Slow down
Question
Less spending, less borrowing along with low prices of Goods and services usually draw an economy near ___________*1 pointa. Deflationb. Recessionc. Depressiond. Slow down
Solution
The answer is a. Deflation.
Here's why:
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Deflation is a decrease in the general price level of goods and services. It occurs when the inflation rate falls below 0% (a negative inflation rate).
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When there is less spending, this means that the demand for goods and services is low.
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When demand is low, businesses often drop their prices in order to encourage consumers to buy their products.
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Less borrowing means that there is less money circulating in the economy, which can also lead to a decrease in prices.
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Therefore, less spending, less borrowing, and low prices of goods and services can lead to deflation.
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