Why was deflation occurring during the Great Depression? Normally the economy is in inflation, and there were other financial disasters, such as the Panic of 1893 and 2008, in which the economy was not experiencing deflation. So why was there deflation during the Great Depression? What caused it?
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Great depression was a low point in the economy. Less people were working and thus the economy was not stimulated and demand went down while supply stayed about the same. This caused the value of goods to drop in order to sell, which made the overall value of money go up.
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