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Deflation Definition

Deflation is a sustained decrease in the general price level of goods and services in an economy.

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What is Deflation?

Deflation increases the purchasing power of money but can also discourage spending as consumers wait for lower prices.

Central banks generally aim to avoid persistent deflation, as it can slow economic growth.

Example of Deflation

An economy where average prices fall by 2% over a year is experiencing deflation.

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