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Detailed explanation-1: -Deflation is generally the decline in the prices for goods and services that occur when the rate of inflation falls below 0%. Deflation will take place naturally, if and when the money supply of an economy is limited. Deflation in an economy indicates deteriorating conditions.

Detailed explanation-2: -Deflation is a process where prices of consumer goods and services fall and money increases in value. Longer periods of deflation can lead to higher unemployment, a decrease in demand, and a reduction in economic activity. Deflation doesn’t necessarily affect the whole economy.

Detailed explanation-3: -Deflation is a sustained fall in the general price level. The right answer to the question provides a combination of both expansionary fiscal and monetary policy in a bid to raise the level of aggregate demand and help (over time) restore price stability.

Detailed explanation-4: -Deflation is a decrease in the general price level of goods and services. Put another way, deflation is negative inflation. When it occurs, the value of currency grows over time. Thus, more goods and services can be purchased for the same amount of money.

Detailed explanation-5: -Deflation Definition Deflation is when consumer and asset prices decrease over time, and purchasing power increases. Essentially, you can buy more goods or services tomorrow with the same amount of money you have today. This is the mirror image of inflation, which is the gradual increase in prices across the economy.