ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Sales have seen a sharp decline due to travel restrictions, social distancing, restrictions on sale of some commodities and customers resorting to budget cuts and putting projects on hold. Companies are struggling to recover fixed costs in the absence of revenue generation due to sharp drop in sales.

Detailed explanation-2: -What Causes Deflation? There are two big causes of deflation: a decrease in demand or growth in supply. Each is tied back to the fundamental economic relationship between supply and demand. A decline in aggregate demand leads to a fall in the price of goods and services if supply does not change.

Detailed explanation-3: -Some sectors, such as household cleaning and frozen foods, have seen increases in consumer demand and have had to navigate the largely positive problem of keeping up their supplies. Others, however, have seen precipitous drops in sales and significantly decreased foot traffic in retail stores.

Detailed explanation-4: -Pricing and inflation: Consumer demand can also impact pricing and inflation. When demand for a product or service increases, its price typically goes up. Conversely, if demand falls, prices tend to decrease. This can influence inflation rates, which can impact the overall health of the economy.