- Price change over time (inflation) is always given per period of time.
- Deflation can be a cause for concern – deflation will usually occur when demand for goods and services are falling, causing firms to lose profits, profits and reduce workforce.
- This will reduce household incomes, causing further reduction in goods and services. The value of debts held by people and firms will rise in real terms as prices fall and burden of making loan repayments rises.
- Eventually the economy goes into recession.