Question

What causes prices to fall during deflation? O decreasing demand

O increasing demand
short supply
high production costs​

Answer 1

decreasing demand

Step-by-step explanation:

Deflation is a general decrease in the prices of goods and services in an economy. The main cause of deflation is a decrease in demand for goods and services, which can occur due to several factors such as a decrease in consumer confidence, a decrease in government spending, or an increase in interest rates. When demand decreases, suppliers will often lower prices to encourage consumers to buy their products, which contributes to the overall decrease in prices.

In contrast, increasing demand for goods and services can lead to inflation, which is a general increase in the prices of goods and services. Short supply or high production costs may also contribute to price increases, but they are not necessarily the primary cause of inflation.