What is Deflation ?

The fall of the price of goods and services and raise of the value of money is termed as Deflation.

When the supply of money decreases ( or supply of goods or services increases) without (increases of the supply of money) decreases of the supply of goods and services in the economy, then the price level got fall and this is called deflation.

In deflation money gains its purchasing power and price level falls that means
Your money can buy more as you could yesterday.

Imbalance between Supply of money and supply of goods and services causes inflation / deflation in the national economy.



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