Question

Can deflation occur without recession? Will deflation worsen a recession or shorten it?

Answer 1

Deflation cannot occur without recession because delation is always opposite to inflation. Where when the recession is severe enough to have the inflation rate go beyond negative value than deflation occurs where the price level decreases.

Deflation always worsen the situation of recession because already the economy is in crisis which in turn further leads to drop in aggregrate demand and slows down the economic output and demand for the investment and consumption also falls much more in this situation.