Deflationary spiral meaning. Deflationary spiral a deflationary spiral is a downward price reaction to an economic crisis leading to lower production lower wages decreased demand and still lower prices. Deflationary spiral definition see under spiraldef 7. A deflationary spiral is a downward price reaction to an economic crisis leading to lower production lower wages decreased demand and still lower prices.
In a last gasp effort to prevent an already depressed european economy from tumbling into an deflationary spiral the european central bank today announced a 11 trillion euroor roughly 13. Another related idea is irving fishers theory that excess debt can cause a continuing deflation. A deflationary spiral is the modern macroeconomic version of the general glut controversy of the 19th century.
A situation in which prices increase then people are paid more in their jobs which then causes. When this happens the supply of money usually decreases leading to a stronger currency which would fuel even lower prices. Economic occurrence where the inflation rate is negative and continuing to decrease.