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What is Deflation?

The definition of Deflation is a decline in general price levels, often caused by a reduction in the supply of money or credit.

Deflation can also be brought about by direct contractions in spending, either in the form of a reduction in government spending, personal spending or investment
spending.

Deflation has often had the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy. The opposite of inflation.

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