"In economics, deflation is a decrease in the general price level of goods and services."
Explanation of what deflation is, how it can be harmful to an economy, and how it can be prevented through monetary policy.
Definition of Deflation: An introduction to the concept of deflation, what it means, and how it differs from inflation. Deflation is a decrease in the general price level of goods and services in the economy over time.
Causes of Deflation: The various factors that lead to deflation in the economy, including changes in demand and supply, changes in money supply, and changes in productivity.
Effects of Deflation: The impact of deflation on the economy, including on consumer spending, business investment, and employment.
The Great Depression: A historical case study of deflation and its impact on the global economy.
Deflation vs. Inflation: A comparison of the two concepts, including their causes, effects, and policies used to address them.
Monetary Policy: An introduction to monetary policy and how it is used to influence the economy, including through interest rates and the money supply.
Central Banks: The role of central banks in setting monetary policy and managing the money supply.
Fiscal Policy: An introduction to fiscal policy and how it can be used to address deflation, including through government spending and taxes.
Zero Lower Bound: The challenges of implementing monetary policy when interest rates are near or at zero percent.
Quantitative Easing: A policy used by central banks to address deflation by increasing the money supply and lowering interest rates.
Debt Deflation: The impact of high levels of debt on the economy and how it can contribute to deflation.
Price Stickiness: The idea that prices in the economy can be slow to adjust to changes in demand and supply.
Supply-Side Deflation: Deflation caused by increases in productivity and efficiency in the economy.
Demand-Side Deflation: Deflation caused by a decrease in consumer spending and investment.
International Trade: The impact of deflation on international trade, including on exchange rates and trade balances.
"Deflation occurs when the inflation rate falls below 0% (a negative inflation rate)."
"Inflation reduces the value of currency over time, but sudden deflation increases it."
"This allows more goods and services to be bought than before with the same amount of currency."
"Deflation is distinct from disinflation, a slow-down in the inflation rate, i.e., when inflation declines to a lower rate but is still positive."
"Economists generally believe that a sudden deflationary shock is a problem in a modern economy because it increases the real value of debt, especially if the deflation is unexpected."
"Deflation may also aggravate recessions and lead to a deflationary spiral."
"Some economists argue that prolonged deflationary periods are related to the underlying technological progress in an economy because as productivity increases (TFP), the cost of goods decreases."
"Deflation usually happens when supply is high (when excess production occurs), when demand is low (when consumption decreases), or when the money supply decreases or because of a net capital outflow from the economy."
"It can also occur due to a contraction created from careless investment or a credit crunch."
"It can also occur due to too much competition and too little market concentration."
"Deflation usually happens when supply is high (when excess production occurs) or when demand is low (when consumption decreases)."
"A sudden deflationary shock is a problem in a modern economy because it increases the real value of debt."
"Deflation is distinct from disinflation, a slow-down in the inflation rate."
"Deflation may also aggravate recessions and lead to a deflationary spiral."
"Some economists argue that prolonged deflationary periods are related to the underlying technological progress in an economy."
"It can also occur due to a contraction created from careless investment or a credit crunch or because of a net capital outflow from the economy."
"As productivity increases (TFP), the cost of goods decreases."
"Sudden deflation increases the value of currency, allowing more goods and services to be bought than before with the same amount of currency."
"A sudden deflationary shock is a problem in a modern economy because it increases the real value of debt, especially if the deflation is unexpected."