Which of the Following Explains Why an Economy That Has

Multiple Choice

Which of the following explains why an economy that has moved away from long-run equilibrium due to a fall in aggregate demand should avoid deflation?

A) Deflation causes a rightward shift in the short-run aggregate supply curve.
B) Deflation is usually accompanied by an increase in employment.
C) Encouraged by lower prices, households increase the demand for goods and services.
D) Consumers often postpone consumption in the expectation that prices will fall further.