How can I combat deflation in the economy?

How can I combat deflation in the economy?

To combat deflation, governments can implement monetary policies like lowering interest rates and increasing money supply.

What specific measures can central banks take?

Central banks can lower interest rates, purchase government bonds, and provide liquidity to banks to encourage lending.

Are there fiscal policies that can help?

Yes, increasing government spending on infrastructure and providing tax cuts can stimulate demand and help combat deflation.

What are the risks of combating deflation?

Risks include potential inflation if measures are too aggressive, and increased public debt from government spending.