deflation

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Related to deflations: Deflationary spiral, Negative Inflation

deflation:

see inflationinflation,
in economics, persistent and relatively large increase in the general price level of goods and services. Its opposite is deflation, a process of generally declining prices. The U.S.
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deflation

(ECONOMICS) a decrease over time in the general level of prices, coupled with an overall reduction in the level of economic activity, new investment, etc. (compare INFLATION). In modern capitalist economies, in which inflation tends to be endemic, deflation is usually relative rather than absolute, involving a reduction in rates of price increase rather than an absolute decrease in prices.

Deflation

 

the decrease of monetary volume by means of the withdrawal from circulation of excess paper money. Deflation often precedes monetary reforms. Since World War II deflation has most often been encountered as part of the so-called deflation policy of capitalist states, which aims at stopping or decreasing the rates of growth of monetary volume and commodity prices. Deflation is realized through limitation of credits (an increase in the rate of interest, imposition of credit limits), higher taxes, reduction of expenditures for social and cultural needs, a “freeze” on wages and salaries, and other measures carried out by capitalist states. These measures result in a lowering of the rate of economic development, a deterioration in the living conditions of the toiling masses, and an intensification of the class struggle.


Deflation

 

the disintegration of rocks and soils owing to wind action, accompanied by the removal and wearing away of the broken particles. Deflation is particularly strong in those parts of deserts from which dominant winds blow (for example, in the southern part of the Karakumy desert). The processes of deflation and physical weathering result in the formation of eroded cliffs with unusual shapes, such as towers, columns, and obelisks.

deflation

[di′flā·shən]
(geology)
The sweeping erosive action of the wind over the ground.

deflation

1. Economics a reduction in the level of total spending and economic activity resulting in lower levels of output, employment, investment, trade, profits, and prices
2. Geology the removal of loose rock material, sand, and dust by the wind
References in periodicals archive ?
This movement corresponds to the overall decline associated with monetary deflation that we discussed in the last section.
In a monetary deflation, we get the reduction in the output of consumer goods and fewer resources devoted to those later stages, but no change at the left end of the triangle.
What both inflation and deflation share is a reliance on those middle stages such as inventory to bear the adjustment burden of the intertemporal discoordination.
By contrast, the idling of resources, including capital goods, that occurs during deflation is less dependent upon the particulars of the capital structure and more a result of the general lack of money necessary to facilitate exchange and production.
Figure 1 illustrates these two distinct forms of deflation using the standard textbook aggregate demand-aggregate supply (AD-AS) framework.
Consequently, stable nominal wages, increasing real wages, and stable profit margins are fully consistent with productivity-generated deflation (Selgin 1997: 65).
As long as the deflation is being generated by productivity gains, there should be an offset from the real interest rate to prevent the nominal interest rate from hitting the zero bound.
Financial intermediation should not be adversely affected either, since the burden of any unexpected increase in the stock of real debt arising from deflation should be offset by a corresponding unexpected increase in real income, while collateral values should not decline but increase as the positive shocks to productivity raise expectations of current and future earnings.
Although history suggests that large deflations are a cause for concern, this Commentary contends that occasional modest deflations (in the range of 1 percent to 2 percent annually) should little concern policymakers.
1] This success has led to a new concern--could deflation be a problem?
The average rate of price deflation between 1929 and 1933 was 6.
Back-of-the-envelope calculations suggest that a perfectly anticipated annual rate of deflation of 6.