Principles of Macroeconomics / Unit 6 MAC 0518 short lesson, about 20 seconds
Deflation
Captions available
The idea
Deflation is a falling price level. It sounds welcome and is not, because falling prices give buyers a reason to wait and waiting cuts demand further.
In practice
It also raises the real value of debts, so borrowers repay in dearer money.
Where people slip
The United States saw deflation in the early nineteen twenties and through the Great Depression.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
Unlocks
- Nothing yet depends on this.
Something wrong in this lesson? Flag it · Sources for Principles of Macroeconomics