Q.What is Deflation ?

Deflation is a continuous decline in the general price level, increasing the purchasing power of money — the reverse of inflation. While inflation means a persistent rise in prices, deflation means a persistent fall in prices across the economy. - As prices fall, the same amount of money buys more goods, so the value of money rises. - It is usually caused by a fall in aggregate demand (or excess supply) relative to the supply of goods. - Mild, once-off price falls are not deflation; deflation is a sustained, general decline. - Prolonged deflation can be harmful: falling prices lower business profits, di …