A general decrease in the prices of goods and services, meaning your money buys more over time. While this sounds good, deflation can be harmful to the economy because people delay spending in hopes of lower prices, which slows business activity. Deflation is much rarer than inflation and usually happens during severe economic downturns.
During deflation, a $3 coffee might drop to $2.90 a year later. This sounds great for buyers, but workers might avoid spending money hoping for even lower prices, and businesses sell less, which can lead to layoffs.
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