Respuesta :
Deflation is the term used by economists to describe a drop in prices.
What happens when prices drop?
When prices are falling, customers put off making purchases in order to wait for further price reductions. As a result, there will be a decline in producer income, economic activity, and economic growth.
What is the phrase used when the economy is slowing down yet prices are still rising?
Stagflation is the occurrence of low economic growth, high unemployment, and rising prices all at once. Stagflation, formerly thought to be inconceivable by economists, has regularly happened in the developed world since the 1970s.
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When prices are falling, economists refer to the situation as deflation. Consumers benefit from this widespread price drop since it gives them more purchasing power.
How can there be a deflation?
Customers' purchasing power grows as costs for goods and services decline across the board in the economy. It is the opposite of inflationary and is occasionally seen as being bad for a nation since it can signal an economic downturn that could lead to a slump or depression.
Who benefits from deflation?
Customers will temporarily profit from deflation because it will result in lower short-term prices for items. This increases the consumer's buying power while also allowing them to save more dollars.
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