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Identify two groups that benefit from deflation and two that lose.

Question

Identify two groups that benefit from deflation and two that lose.

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Step 1

Deflation is a situation in which the general price level tends to fall as compared to the past year. In other words, deflation can be identified when the inflation rate turns out to be negative. Deflation can lead to many problems in the economy but it is also the case when a normal amount of deflation is good for the economy.

Step 2

The major two groups that are benefited from the situation of deflations are wage earners and lenders. The reason behind the same is that in the case of wage earners deflation leads to an increase in the real value ...

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