Practice Quiz

Financial Planner

Category - General Principles of Financial Planning

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What is caused by the decline of general price levels caused by the reduction in the supply of money or credit?
  1. Stagflation
  2. Deflation
  3. Inflation
  4. National Indicator
Explanation
Answer: B - Deflation is caused by the decline of general price levels caused by the reduction in the supply of money or credit. Deflation often created when there is a reduction in government, personal, or investment spending. Deflation is usually accompanied by higher rates of unemployment due to lower product demand.
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