# Deflation

## What is deflation?

Deflation is a decrease in the general price level of goods and services. In other words, deflation occurs when prices fall. Deflation can be caused by a decrease in aggregate demand or an increase in aggregate supply.

Deflation is often considered to be negative because it can lead to lower wages, higher unemployment, and less economic activity. However, there are also some positives to deflation. For example, deflation can be good for borrowers because it means that they will have to repay their debts with cheaper dollars.

Dictionary online

reduction of the general level of prices in an economy.

Wikipedia

In economics, deflation is a decrease in the general price level of goods and services. 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.