Long deflationary periods can cause a freefall in business profits, lower returns on most investments, and widespread job layoffs.

Question

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During long deflationary periods, prices of goods and services decrease, leading to reduced revenue for businesses, which can result in lower profits and potentially force companies to lay off employees to cut costs. Additionally, deflation can lead to lower returns on investments as the economic activity slows down and demand decreases.

Long Deflationary Periods Can Cause a Freefall in Business Profits