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What do We Mean by Deflation?


Deflation

A decline in general price levels, often caused by a reduction in the supply of money or credit. Deflation can also be brought about by direct contractions in spending, either in the form of reduction in government spending. Deflation has often has the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy. Opposite of inflation.

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MuddleHead Signs Off!!