Question

What is deflation?

Short answer

It is just the opposite of inflation.

Step-by-step solution

Step 1. Introduction

When the price level in the economy increases because of several reasons such as increase in money supply,it is known as inflation.

Step 2. Explanation

Deflation is just the antonym of inflation. as inflation is the increase in average prices and deflation is the decrease in average prices. it is to be noted that in deflation consumers are benefitted.

Deflation is a decrease in the average prices of goods and services.in the time of deflation the purchasing power of money increases which means we can buy more with the same amount of money as compared to the past.