The main disadvantages of deflationary policies is

Source: JAMB · 2024

The main disadvantages of deflationary policies is

  1. full employment in the country
  2. increasing cost of living
  3. improved standard of living
  4. unemployment in the country ✓
Explanation

Deflationary policies reduce spending and economic activity. Businesses cut production and lay off workers.

These policies lower inflation but create job losses. Full employment and better living standards are not achieved.

The main cost of fighting inflation through deflation is higher unemployment.

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