Deflation
Heterodox
In economics, deflation is the decrease in a general price level of goods in addition to services. Deflation occurs when the inflation rate falls below 0% a negative inflation rate. Inflation reduces the return of currency over time, but sudden deflation increases it. This allows more goods together with services to be bought than previously with the same amount of currency. Deflation is distinct from disinflation, a slow-down in the inflation rate, i.e. when inflation declines to a lower rate but is still positive.
Economists generally believe that a sudden deflationary shock is a problem in a sophisticated economy because it increases the real value of debt, especially if the deflation is unexpected. Deflation may also aggravate recessions and lead to a deflationary spiral.
Some economists argue that prolonged deflationary periods are related to the underlying of technological keep on in an economy, because as productivity increases TFP, the survive of goods decreases.
Deflation usually happens when supply is high when excess production occurs, when demand is low when consumption decreases, or when the money supply decreases sometimes in response to a contraction created from careless investment or a credit crunch or because of a net capital outflow from the economy. It can also occur due to too much competition and too little market concentration.