ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -Deflation is the opposite of inflation. It is a decrease in the general price level of goods and services and represents an increase in the value of money, where an amount of money can be exchanged for more goods and services.

Detailed explanation-3: -Deflationary spiral. Falling prices may result in less production. Less production may lead to lower pay. Lower pay may result in a drop in demand. And a drop in demand may cause increasingly lower prices.

Detailed explanation-4: -Price deflation is a gradual decrease in consumer prices for goods and services. This is often caused by the deflationary gap, also known as demand gap, which is characterized by low demand and oversupply. Expecting prices to drop, consumers and businesses hold on to their money rather than spending it.

Detailed explanation-5: -Deflation is a fall in the overall level of prices in an economy and an increase in the purchasing power of the currency. It can be driven by an increase in productivity and the abundance of goods and services, by a decrease in total or aggregate demand, or by a decrease in the supply of money and credit.