ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -(I) Deflation is a decrease in the general price level of goods and services. It occurs when the inflation rate falls below 0%. (II) Disinflation is the same phenomenon as deflation.

Detailed explanation-2: -When prices are falling, consumers delay making purchases if they can, anticipating lower prices in the future. For the economy this means less economic activity, less income generated by producers, and lower economic growth.

Detailed explanation-3: -Deflation is the general decline of the price level of goods and services. Deflation is usually associated with a contraction in the supply of money and credit, but prices can also fall due to increased productivity and technological improvements.

Detailed explanation-4: -Key Takeaways. Inflation is an increase in the general prices of goods and services in an economy. Deflation, conversely, is the general decline in prices for goods and services, indicated by an inflation rate that falls below zero percent.

Detailed explanation-5: -A persistent decline in the level of prices can also have a negative impact on the economy. This is called deflation.