In addition to redistributing incomes, inflation may affect the total real income and prod
In deflation, on the other hand, the growing unemployment of labor and capital causes the community's total well-being to be less; so in a sense, the gainers get less than the losers lose. As a matter of fact, in a depression, or a time of severe deflation, almost everyone suffers, including the creditor who is left with uncollectable debts.
For these reasons as increase in consumption of investment spending is considered good in times 'of unemployment, even if this tends to increase prices slightly. When the economic system is suffering from severe depression, few people will criticize private' or public spending on the ground that this might be inflationary. Actually, most of this increased spending will increase production and create jobs. Once, lull employment and full plant capacity have been reached, however, any further increases in spending are likely to be completely wasted in price increase.
"Historical patterns "mentioned in the passage means that in mild inflation ______.
A.there will be more production and employment
B.private investment will be moderate and people's income influenced
C.the bad effects of tile two evils will be associated with each other
D.the fixed wages of the workers are no longer fixed