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Economics · Oct / Nov 2025 · Paper 13 · Question 24

2281Inflation

A country's Consumer Prices Index (CPI) falls from 120 to 110 in a year. What will be a likely effect of this fall?

  1. Aincomes will fall in real terms
  2. Bsavings will fall in real terms
  3. Cthe rate of interest will rise
  4. Dthe real value of debt will rise

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Correct answer: D. the real value of debt will rise

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