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Definition: The opposite of inflation, deflation is when the price of goods begins to fall.  This sounds like a good situation (because things are cheaper) but it's really not!

TeenAnalyst Advice: Most people think of the Great Depression when they think about deflation.  Minor deflation isn't terrible but prolonged deflation means that the value of real estate decreases.  People will begin to feel "less wealthy" because of this and spend less money.  Without consumer spending, the economy can spiral into another depression.


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