ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Deflationary spiral. This is a domino effect caused by each overlapping piece of deflation. Falling prices may result in less production. Less production may lead to lower pay. Lower pay may result in a drop in demand.

Detailed explanation-2: -The correct answer is It is a persistent fall in the general price level of goods and services. Deflation-It is a persistent fall in the general price level of goods and services.

Detailed explanation-3: -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-4: -Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. During deflation, the purchasing power of currency rises over time.