deflation

de·fla·tion

noun \di-ˈflā-shən, ˌdē-\

Definition of DEFLATION

1

: an act or instance of deflating : the state of being deflated

2

: a contraction in the volume of available money or credit that results in a general decline in prices

3

: the erosion of soil by the wind

— de·fla·tion·ary \-shə-ˌner-ē\ adjective

Examples of DEFLATION

1. Economists worry that deflation will bring the country into recession.

First Known Use of DEFLATION

1891

Other Economics Terms

actuary, compound interest, globalization, indemnity, portfolio, rentier, stagflation, usurer

deflation

noun    (Concise Encyclopedia)

Contraction in the volume of available money or credit that results in a general decline in prices. A less extreme condition is known as disinflation. Attempts are sometimes made to bring on deflation (through raising interest rates and tightening the money supply) in order to combat inflation and slow the economy. Deflation is characteristic of depressions and recessions.