Two prominent examples of deflation are the 2007-2008 recession and the Great Depression in the United States of America (USA). When deflation happens, the prices of goods and services will fall, which will impact the production which will lead to fall in the revenues and profits of organisations. Hence the companies will be forced to lay off workers thereby increasing the unemployment rate. Deflation has a massive negative impact on the economy of a nation. You can read about the Inflation in Economy- Types of Inflation, Inflation Remedies [UPSC Notes] in the given link.

Further readings:

  1. Inflation Targeting: Methods, Drawbacks and Benefits
  2. Consumer Price Index (CPI) – CPI and its Types [USPC Indian Economy Notes]

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