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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Your average consumer had less dollars to spend, so companies were forced to decrease their prices to sell goods and services. Inflation is based on the price change of a basket of goods, thus it went down.
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