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Answer Posted / aditya sharma,jalandhar
A general decline in prices, often caused by a reduction in
the supply of money or credit. Deflation can be caused also
by a decrease in government, personal or investment
spending. The opposite of inflation, deflation has the side
effect of increased unemployment since there is a lower
level of demand in the economy, which can lead to an
economic depression. Central banks attempt to stop severe
deflation, along with severe inflation, in an attempt to
keep the excessive drop in prices to a minimum.
The decline in prices of assets, is often known as Asset
Deflation.
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