ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -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.

Detailed explanation-3: -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-4: -There are two types of deflation. There is bad deflation, which is when aggregate demand for a good falls faster than aggregate supply. Then there is good deflation. Deflation is considered “good” when aggregate supply grows faster than aggregate demand.