deflation

What is deflation?

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Deflation is an economic term that refers to a general decline in the prices of goods and services over a period of time. It is the opposite of inflation, which is the rise in prices. Causes of Deflation: Decrease in consumer demand – When people spend less, businesses lower prices to attract buyers. Deflation causes people to hoard money and put off spending it. When the general level of prices is falling, people will think about buying goods later believing …

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Why is deflation a concern?

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There are fears that that the US economy could fall into a depression, and this could cause deflation. These concerns have emerged after US consumer prices fell 0.8% in April 2020. Most people understand that a depression is something that needs to be avoided, but what about deflation? It is less understood but is something that investors need to be concerned about. Definition of deflation Deflation is defined as the decrease of the general price level of goods and services. …

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