What is deflasion?

Answer 1

Deflation is the decrease in the general price levels of goods and services in an economy over time. It often occurs when there is a reduction in consumer demand, leading to lower production costs and prices. While it may seem beneficial for consumers in the short term, deflation can lead to economic stagnation, increased unemployment, and a vicious cycle of decreased spending and investment. Central banks typically aim to avoid deflation as it can hinder economic growth.