Business and Personal Finance Dictionary

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• DEFLATION
  
  Deflation Is the economic and financial phenomenon which represents declining prices particularly for goods and services. It can occur in countries with strengthening currencies. Here, the cost of imports would tend to decline. It can also occur in countries which are experiencing depressed economic conditions. At such times of declining output, sales of assets generate considerable downside pressure on prices. Deflation can be viewed in monetary terms when the money supply is constracting to such an extent that one unit of currency purchases increased amounts of goods and services.
  
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