Damaging Effects of Deflation on an Economy - Damaging Effects of Deflation on an Economy Damaging Effects of Deflation on an Economy Student Name

Damaging Effects of Deflation on an Economy - Damaging...

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Damaging Effects of Deflation on an Economy Damaging Effects of Deflation on an Economy Student Name Institution
Damaging Effects of Deflation on an Economy Damaging Effects of Deflation on an Economy Deflation is the intermittent decline in prices which is disastrous to the economy of a country. It only occurs when the supply and demand curve is disproportionate because the goods overflow the market and so for them to be easily disposed of, the price must be lowered Some of the major causes of deflation include increase in production which ultimately overwhelms the demand side; change in the structure of capital markets especially when many companies produce the same kind of goods; decrease in supply of currency which limits the ability of people to buy; austerity measures under which the government limits its spending, and finally the deflationary spiral which catalyzes the situation once a country is experiencing deflation.

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