During Japan's bubble-economy years of fiscal 1983-1990, consumer spending grew at an annu

alized 5.5 percent in real terms. But during the Heisei recession of fiscal 1991 -2001, consumer- spending growth slowed to an annualized 1.0 percent. Most experts agree that the slowdown in consumer spending, which accounts for 20 percent of gross domestic expenditures, was mainly responsible for the recession.

So, what should be done to stimulate consumer spending？ World-renowned economist Paul Krugman argues that the public should be encouraged to expect inflation. His theory is based on psychology: Consumers tend to increase spending if they expect inflation, and cut spending if they anticipate deflation.

In my opinion, though, this psychology applies only to real estate. During the bubble economy, land prices in and around Japan's six largest cities soared at an annualized 23.2 percent. In five years starting in fiscal 1985, land prices in the same area grew 2.8 times. In such a situation, people naturally rushed to obtain mortgages and buy homes. Land prices started falling in fiscal 1991. During the subsequent recession, prices in and around the six largest cities plunged 33 percent, or an annualized 10.2 percent, from fiscal 1990. The plunge led to a sharp depreciation in real-estate values, causing potential home buyers to expect further drops. This dampened real-estate transactions and touched off a chain reaction in price declines.

Such a scenario, however, is unlikely with the new generation of high-tech products such as personal computers, digital cameras and DVD systems. These products command surprisingly high prices when they debut, but mass production causes prices to drop by more than half within several years. Consumers expect deflation over the years for new high-tech products, which often sell out at first due to strong demand.

Real-estate prices are based on asset value (present value incorporating future gains) while consumer-product prices are based on utility value (value of convenience and satisfaction obtained from using the products ). Consumers buy new digital cameras for their convenience and new features. Thus expectations of future price drops are unlikely to discourage them from making purchases. Expectations of inflation do cause people to rush to buy real estate, but there is no significant correlation between consumer spending and expectations of inflation. However, should expectations of inflation cause a benign cycle of inflation and a strong rise in real-estate prices, the "asset effect" can lead to an increase in consumer spending.

In this passage the author tries to______.

A．criticize Paul Krugman for omitting some crucial points in his theory.

B．explain the recession in the consumer-product in Japan.

C．bring up a theory concerning the consumer behavior.

D．cast some light on how to pull Japan out of the recession in the consumer-product.