deflation

• what is deflation?

  rate of inflation falls below 0%
• what is deflation a sign of?

  economy doing badly and falling A.D and increased unemployment
• what problem can deflation cause?

  if consumers think prices are falling then they may not choose to spend in the hope prices fall further
• how is there reduced Econ growth (deflation)

  less spending and lower prices mean lower profits for firms
• how can deflation be caused?

  if firms costs fall (new tech) and benefits passed onto consumers in form of lower prices
• fall of prices and indicates a slowdown in the rate of growth of output in the economy