Learnt about inflation-let us discuss deflationAlmost all of us know about inflation. Whenever we talk about price rise, we use this term. In layman's language. inflation can be described as general rise in the price of goods and services. Inflation is caused due to wars, high wages, uncontrolled expenditure by the Government and resultant buget deficit and uncontrolled expenditure by the ruler (Example: Construction of Taj Mahal by Shahjahan caused inflation in Mughal kingom). Uncontrolled inflation is harmful for the country's economy and common people.
Now let us discuss deflation. Deflation is just opposite of inflation. It causes a decrease in the price of goos and services in a country. Is it good for the economy? No. Deflation always causes lesser demand for goods and services. So, the production goes down causing loss of jobs or drastic cut in salary. So, deflation is also bad for the economy of the country. Deflation happens when Government drastically cut the expenditure, or when the citizens suddenly start spending less.
However, deflation is a very rare phenomenon.