Deflation is a decrease in the general price level of goods and services. It is the opposite of inflation, which is an increase in the general price level. Deflation can be caused by a number of factors, including a decrease in aggregate demand, an increase in the supply of goods and services due to technological advancements, or a decrease in the quantity of money in circulation..
Deflation can have a number of negative consequences for an economy, including a decrease in economic growth, an increase in unemployment, and a decrease in investment. It can also make it more difficult for businesses to repay their debts. Historically, deflation has been associated with economic depressions, such as the Great Depression of the 1930s.