Everything about Deflationary Spiral totally explained
In economics, a
deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price. Since reductions in general price level are called
deflation, a deflationary spiral is when reductions in price lead to a
vicious circle, where a problem exacerbates its own cause. The
Great Depression was regarded as a deflationary spiral.
Economic theory
A deflationary spiral is the modern
macroeconomic version of the
general glut controversy of the 19th century.
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