If you understand inflation, deflation is simply the flip side of the coin. In fact, sometimes it referred to as “negative inflation.” Like inflation, deflation is determined in relationship to a basket of goods and services. What is deflation? How is it measured? Salman Khan of the Khan Academy explains in a simplified example.
From this video, you’ll understand:
- How to understand deflation over time
- Why policymakers strive to avoid deflation