The situation is always that deflation will increase the quantity of real GDP demanded because the general price Level decreases.
This refers to the persistent fall or decrease of asset prices or the prices of goods and services.
It is also called the negative inflation rate and occurs when the general prices fall continuously.
As the prices deflate, purchasing power increases, meaning consumers can use the same amount of money to purchase a larger amount of goods or services.
Hence, the situation is always that deflation will increase the quantity of real GDP demanded because the general price Level decreases and could led to higher rates of unemployment and make consumers to default on their debt obligations in long-term.
Therefore, the Option A is correct.
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