Q1 Deflation refers to the phenomenon of a negative inflation rate. (In 2004, the inflation rate was negative in Hong Kong and we say Hong Kong suffered deflation in 2004.) Many people regard deflation as bad. Can you explain why? Is deflation sometimes good (at least for some people)? (6%)

Q2 People complained about 'negative real interest rates' in the early 1990s, and again since 2009. Can real interest rates be negative? How can that be so? (4%)