Note 1-16

16 The process of an economy falling into a deflationary spiral is as follows: As a result of declines in corporate sales and profits caused by a decline in price, corporations slash investment and implement employment and wage adjustments (decline of wages comes after decline of prices), this, in turn, decreases personal consumption. This is a vicious circle of a decline in demand, such as investment and personal consumption, causing a further decline of prices (and therefore a decline in production).