Deflation
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Deflation conversely is the general decline in prices for goods and services indicated by an inflation rate.
Deflation. Deflation occurs when the inflation rate falls below 0 a negative inflation rateinflation reduces the value of currency over time but sudden deflation increases it. It is the opposite of the often encountered inflation. Deflation is a widespread fall in prices just as inflation is a widespread increase in prices.
This allows more goods and services to be bought than before with the same amount of currency. Nevertheless there is often a link between monetary and price deflation so monitoring the annual percentage change in consumer prices is useful. Deflation is a contraction in the supply of circulated money within an economy and therefore the opposite of inflation.
These directions of travel means inflation is highly likely. In times of deflation the purchasing power of currency and wages are. Deflation makes the situation worse inflation makes the situation less bad.
A reduction in money supply or credit availability is the reason for deflation in most cases. While this may seem like a great thing for shoppers the actual cause of widespread deflation is a long term drop in demand. Deflation is what most forecasters are expecting to see in the aftermath of this crisis.
Deflation occurs when asset and consumer prices fall over time. Inflation is an increase in the general prices of goods and services in an economy. The proper definition of inflation or deflation refers to the monetary side.
And deflation isnt easy to fix. Will most people even notice 7 inflation a year. Deflation is not a routine feature of the economic cycle which is marked by alternating periods of expansion and contraction against a backdrop of steadily rising prices.
In economics deflation is a decrease in the general price level of goods and services. It ought to be expected given the precedent set in the aftermath of the last global economic downturn. When the overall price level decreases so that inflation rate becomes negative it is called deflation.
Reduced investment spending by government or individuals may also.
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