Deflation :
Deflation is the continuous decrease in prices of goods and services. Deflation occurs when the inflation rate becomes negative (below zero) and stays there for a longer period.
EFFECTS
The effects of deflation are:
1. Decreasing nominal prices for goods and services
2. Increasing real value of cash money and all assets denominated in cash terms
3. May decrease investment if cash holdings are seen as preferable
4. May encourage bank savings in preference to other forms of investment
5. Benefits creditors at the expenses of debtors
6. Benefits recipients of fixed incomes
7. Recessions and unemployment (disputed)
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