deflationary spiral

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Explanation of "Deflationary Spiral"

Definition: A "deflationary spiral" is a situation in the economy where prices and wages are falling, and this decline happens at an increasing rate. It means that money is becoming more valuable, but this can lead to negative effects for businesses and consumers.

Usage Instructions

• Part of Speech: Noun
• How to Use: You can use "deflationary spiral" when discussing economic issues, particularly in relation to falling prices, wages, and economic growth.

Example

• "If the economy continues in a deflationary spiral, many businesses might struggle to stay open because people are spending less money."

Advanced Usage

• In more complex discussions, you might say:
  • "The deflationary spiral can create a vicious cycle where consumers delay purchases, leading to further price drops and increased unemployment."

Word Variants

• Deflation: This refers to the overall decrease in prices of goods and services.
• Inflationary Spiral: This is the opposite situation, where prices and wages keep increasing.

Different Meanings

• Deflation in Economics: Refers strictly to the decrease in prices.
• Spiral: In general terms, this can refer to any situation that continuously worsens or improves in a circular way.

Synonyms

• Economic contraction
• Price decline
• Decreasing economic activity

Related Idioms and Phrasal Verbs

• "Downward spiral": This is a more general term that means a situation is getting worse in a continuous manner, not limited to economics.
• "Tighten one's belt": This means to spend less money or to save more, often used when prices are rising or economic conditions are tough.

Summary

A "deflationary spiral" is a challenging economic situation where prices and wages keep going down, leading to a cycle that can harm the economy.

Academic

Noun

1. an episode of deflation in which prices and wages decrease at an increasing rate and currency gains in value