What is deflation and how to control it.
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4
Answer:
To control deflation, the central bank can increase the reserves of commercial banks through a cheap money policy. They can do so by buying securities and reducing the interest rate. As a result, their ability to extend credit facilities to borrowers increases.
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1
Answer:
When the overall price level decreases so that inflation rate becomes negative, it is called deflation
Explanation:
To control deflation, the central bank can increase the reserves of commercial banks through a cheap money policy. They can do so by buying securities and reducing the interest rate. As a result, their ability to extend credit facilities to borrowers increases.
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