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Detailed explanation-1: -Causes of Deflation A decline in aggregate demand typically results in subsequent lower prices. Causes of this shift include reduced government spending, stock market failure, consumer desire to increase savings, and tightening monetary policies (higher interest rates).

Detailed explanation-2: -Economists determine the two major causes of deflation in an economy as (1) fall in aggregate demand and (2) increase in aggregate supply.

Detailed explanation-3: -Deflation can be caused by an increase in productivity, a decrease in overall demand, or a decrease in the volume of credit in the economy. Most of the time, deflation is unambiguously a positive trend for the economy, but it can also under certain conditions occur along with a contraction in the economy.

Detailed explanation-4: -The causes of deflation are decreased consumer demand, a fall in production cost, an insufficient supply of money and fierce competition in the market. Deflation results in a deflation spiral, higher unemployment, increased debt rates and reduced investment.