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What are the effects of unanticipated deflation? Multiple select question. The real incomes of people with fixed nominal incomes will increase. The purchasing power of savings will increase. The real value of fixed-monetary assets will decline. Creditors will benefit at the expense of debtors.

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Unanticipated deflation involves the sudden decrease in the prices of goods and services .The effects of unanticipated deflation include

  • The purchasing power of savings will increase

  • Creditors will benefit at the expense of debtors.

  • The real value of fixed-monetary assets will decline

The purchasing power of savings will increase as the prices of goods and services has reduced thereby giving rise to buying more with the same amount of money.

Other effects include creditors benefiting at the expense of debtors and the real value of fixed-monetary assets being on the decline.

However, the real value of real incomes of people with fixed nominal incomes will not increase as no change occurs  when dealing with deflation as there is usually no adjustments.

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