Overview

Though steadily falling prices over a prolonged period sounds like a good thing, deflation is the ultimate vicious cycle. When the money supply decreases due to tight credit, a terrible cascade of negative reactions ensues, often leading to severe economic contraction, recession, or depression. If there is too little money circulating in the economy, demand for goods drops, as do prices. If companies sell less at a lower profit, they cut back on manufacturing of existing products and development of new ones. They eventually are forced to release workers. Unemployed workers spend even less on consumer goods, so demand and prices dip even lower. More layoffs occur, and the negative cycle deepens. This book is an invaluable guide to this most dangerous of economic cycles and offers the power of knowledge, helping readers to adapt to shifting economic trends with comprehension, historical perspective, and sound advice and strategies.

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9781435894655

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Series Review: Real World Economics: Set 2 These books explore financial topics not usually addressed for students... Why Banks Fail is fascinating, well written, and accessible.... This text is lucid and keeps such concepts as contagious bank runs and cascading bank failures easy for students to understand. How Taxation Works is straightforward and perfunctory. The further reading recommendations are focused for teens. --School Library Journal

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