deflation

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Related to deflationary: deflationary gap, Deflationary spiral

Deflation

Decline in the prices of goods and services. Antithesis of inflation.

Deflation

A situation in which a currency gains value, often resulting from a decrease in prices. Many economists believe that deflation is the result a fall in demand for goods and services, which causes producers to reduce prices. This reduces their profits and causes a reduction in investment, which contributes to a further drop in demand. Because of this deflationary spiral, deflation is often associated with recessions and depressions and has been known to cause unemployment. It is also called negative inflation. See also: Lost Decade, Inflation.

deflation

A reduction in consumer or wholesale prices. The term generally applies to more than just a temporary decline. Compare inflation. See also disinflation.

Deflation.

Deflation, the opposite of inflation, is a gradual drop in the cost of goods and services, usually caused by a surplus of goods and a shortage of cash.

Although deflation seems to increase your buying power in its early stages, it is generally considered a negative economic trend. That's because it is typically accompanied by rising unemployment, falling production, and limited investment.

deflation

a fall in the rate of growth of the general level of prices in an economy, or an absolute reduction in the general level of prices (see PRICE INDEX). The authorities may seek to deflate the economy in order to combat INFLATION and eliminate a BALANCE OF PAYMENTS deficit by using restrictive monetary and fiscal measures, i.e. increasing interest rates and taxes to cut spending. See ECONOMIC POLICY, MONETARY POLICY, FISCAL POLICY, PRICES AND INCOMES POLICY.

deflation

a reduction in the level of NATIONAL INCOME and output usually accompanied by a fall in the general price level (DISINFLATION).

A deflation is often deliberately brought about by the authorities in order to reduce INFLATION and to improve the BALANCE OF PAYMENTS by reducing import demand. Instruments of deflationary policy include fiscal measures (e.g. tax increases) and monetary measures (e.g. high interest rates). See MONETARY POLICY, FISCAL POLICY.

References in periodicals archive ?
The most recent deflationary period in the US was 1929-1933 as the depression took hold.
There is so much slack in the Japanese economy--under- and unemployed workers, deflationary pressures, forgone investment opportunities, savings being left in accounts at near-zero returns--that there can be above-potential "catch-up" growth until the underutilized resources are nearly fully employed.
The BOJ chief stressed the central bank will ''closely monitor'' economic developments to prevent a deflationary spiral.
1 percent in March, falling into deflationary territory for the first time in one-and-a-half years.
A solvent banking system, ready and able to take credit risk, would also remove a major source of deflationary pressure.
It is true that the economy is in a severe situation, but it is not true that it is in a deflationary spiral,'' Muto told a regular press conference.
Analysts said deflationary pressure in Japan is strengthening more than the April CPI indicates.
With no one borrowing, the entire savings of the household sector together with the debt repayment of the corporate sector just sits in the banks unused, effectively becoming the economy's deflationary gap.
He said the BOJ will continue to supply ample liquidity to the banking system and will closely monitor the state of the economy to prevent a deflationary spiral.
This condition makes it difficult for the economy to wiggle out of a deflationary hole.
A crucial task facing the prime minister is to demonstrate a firm determination to end the deflationary crisis facing this country and help stabilize the global economy.