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Chapter 22: Q 18 (page 553)

What is deflation?

Short Answer

Expert verified

Continual price fall over time.

Step by step solution

01

Step 1. DEFLATION

Deflation is opposite situation of inflation it is a situation when price level in the economy decreases because of several reasons such as decrease in money supply, it is known as deflation.

02

Step 2. Explanation

Deflation is a decrease in the average prices of goods and services.in the time of deflation the purchasing power of money increases which means we can buy more with the same amount of money as compared to the past.

it is negative inflation because rate of inflation is reduced below 0%.

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Most popular questions from this chapter

Why do you think the U.S. experience with inflation over the last 50 years has been so much milder than in many other countries?

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