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8 May, 2015 - 11:15

Deflation is a widespread pattern of price decreases. Historically, deflation is less common that inflation, but it is also more feared because the loss of revenues of a large number of firms may result in widespread bankruptcies and decrease in economic activity (as it happened, for instance, during the great depression of the 1930's).

Periods of deflation have been rather rare in most countries of the world. During the great depression of the 1930's, prices did go down. The consequences were quite devastating: many companies went out of business for lack of revenues.