what would be the most likely result of deflation for businesses? companies may lay off workers due to a…
what would be the most likely result of deflation for businesses? companies may lay off workers due to a loss of profit. companies may hire more workers to help increase production. companies may spend more money on the raw materials they use. companies may raise the wages and salaries they pay employees.
Answer
Brief Explanations:
Deflation is a decrease in the general price - level of goods and services. During deflation, consumer demand often drops as people expect prices to fall further. This leads to lower revenues for businesses. To cut costs and deal with the loss of profit, companies may lay off workers. Hiring more workers, spending more on raw materials, or raising wages are not typical responses as they would increase costs in a low - revenue environment.
Answer:
Companies may lay off workers due to a loss of profit.