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Deflation

• Deflation Is the economic and financial phenomenon which represents declining prices particularly for goods and services. It can occur in countries with strengthening currencies. Here, the cost of imports would tend to decline. It can also occur in countries which are experiencing depressed economic conditions. At such times of declining output, sales of assets generate considerable downside pressure on prices. Deflation can be viewed in monetary terms when the money supply is constracting to such an extent that one unit of currency purchases increased amounts of goods and services.

 
 Embedded terms in definition
 Assets
Currency
Money supply
Prices
Sales
Strengthening
Unit
 
 Referenced Terms
 Consumer price index: The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the pace of U.S. inflation. The U.S. Department of Labor publishes the CPI very month.Abbreviated CPI. A measure of price changes in consumer goods and services used to identify periods of inflation or Deflation.Abbreviated CPI. A commonly used measure of the increase (or decrease) in costs of goods and services, published by the U.S. Bureau of Labor Statistics.

 Real rate of return: The annual percentage return realized on an investment, adjusted for changes in the price level due to inflation or Deflation.

<< Deflate Degree of financial leverage >>

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The difficulty lies not so much in developing new ideas as in escaping from old ones. - John Maynard Keynes

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