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When prices across the economy decline over time, increasing money's purchasing power.
Definition
When prices across the economy decline over time, increasing money's purchasing power. While it sounds good, deflation can be dangerous because people delay purchases expecting lower prices, which hurts the economy. Central banks fear deflation more than inflation.
Related Terms
The rate at which prices rise and money loses purchasing power.
How central banks manage money supply and interest rates to influence the economy.
An economic downturn typically defined as two consecutive quarters of declining GDP.
One hundredth of a percentage point (0.
A digital form of a country's official currency issued and controlled by its central bank.
A measure of average price changes for a basket of consumer goods and services.
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