D is corrent. The requirement is to identify the action that is a preventive measure for a period of deflation. D is corrent because in a period of deflation the government wants to encourage borrowing and investment to promote economic growth. A is incorrect because in a period of deflation interest rates are often near zero or even negative. Reducing rates is not as effective as increasing the money supply. B is incorrect because this is a preventive measure for a period of inflation. B is incorrect because this is a preventive measure for a period of inflation.
