Deflation

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Deflation is the opposite of inflation. It is the decrease in the price of a basket of goods and services. Deflation happens when the annual inflation rate turns negative. Such an event is usually brought about by a reduction in the money supply and/or credit.

Currency Impact

While inflation tends to decrease the purchasing power of a currency, deflation tends to result in an increase in the “real” value of money.

Related Articles:

Inflation

Money Supply

Producer Price Index

Consumer Price Index

Japanese economy

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