Your Roommate Argues That He Can Think of No Better

Multiple Choice

Your roommate argues that he can think of no better situation than living in a deflationary economy because prices of goods and services would continuously fall.You disagree and argue that during a deflation, people can be made worse off because

A) the purchasing power of people's incomes would increase.
B) the purchasing power of the currency would decrease.
C) the value of the real interest rate will drop below the nominal interest rate.
D) borrowers will have to pay increasing amounts in real terms over time.
E) the value of taxes collected by government will fall.