Kate Brown chapter 10 question 6

A section of this chapter that I found interesting was the author's introduction to defaltion. The negative effects of inflation are discussed and it is explained how the cycle of rising pricces can be dangerous. The logical thought would be that the opposite of rising prices (falling prices) would be the solution. However, this chapter discusses how falling prices lead to people postponing their purchases. "Why buy a refrigerator today when it will cost less next week?" At the same time wages are also dropping so people continue to spend less. One of the most important things that this book has discussed is that an economy can only grow if people are buying things. Deflation causes people to "feel poorer" and therefore contribute less to the already weakened economy.