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What is the consequence of deflation in terms of aggregate demand? please post response and one reply for your person?
Explanation & Answer
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The Effects of Deflation on Aggregate Demand
Deflation occurs when the prices of commodities decrease from one period to another as
measured by the consumer price index in the United States or equivalent system of measurement
within a country. In the short-term deflation can provide a moderate boost to consumer spending
when prices for basic commodities such as food and fuel decrease. However, sustained deflation
across the economy lead to economic recessions, and as deflation worsens during a recession it
can further aggrav...