What can cause deflation - SS2 Economics Causes & Effects of Inflation/Deflation Question
What can cause deflation?
A
An increase in demand for goods and services
B
An increase in the money supply
C
A decrease in the supply of goods and services
correct option: c
(When the demand for goods and services decreases, prices tend to decrease. This is because a decrease in demand will lead producers to lower prices with the hope of attracting consumers to purchase their goods and services)
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