What is deflationary shock?

Deflationary gap is the shortfall in AD from the level required to maintain full employment equilibrium in the economy. In other words, it is equal to the difference between AD at full employment and AD at underemployment. In such a situation, there is involuntary unemployment in the economy. When an economy undergoes a deflationary shock, the implications can be both positive and negative for consumers and businesses. Disinflation usually occurs during a period of recession and manifests itself by slowing down the rate at which prices increase; this occurs as a result of a decrease in consumer sales.

the implications can be both positive and negative for consumers and businesses. Disinflation usually occurs during a period of recession and manifests itself by slowing down the rate at which prices increase; this occurs as a result of a decrease in consumer sales.