A columnist writing in the Wall Street Journal observed: “Franklin D. Roosevelt’s March 1933 inaugural line ‘that the only thing we have to fear is fear itself’ was inspiring, but wrong. There was plenty to fear, not least the deflation that then gripped the nation.”
a. Prices fall when a country experiences deflation, so isn’t deflation good for consumers? Briefly explain.
b. Was deflation during the early 1930s good or bad for firms? Briefly explain.