What Is Deflation And Its Causes? Deflation can be caused by a combination of different factors, including having a shortage of money in circulation, which increases the value of that money and, in turn, reduces prices; having more goods produced than there is demand for, which means businesses must decrease their prices to get people
What Happens To Debt During Deflation? During times of deflation, since the money supply is tightened, there is an increase in the value of money, which increases the real value of debt. Most debt payments, such as mortgages, are fixed, and when prices fall during deflation, the cost of debt remains at the old level.
What Is Deflation In History? Deflation is a decrease in the general price level of goods and services; it is the opposite of inflation, which occurs when the cost of goods and services is rising. … The most dramatic deflationary period in U.S. history took place between 1930 and 1933, during the Great Depression. What