Abstract. Deflation in the economy of a country is determined as a result of reduction of the amount of money in circulation by the central bank and the financial sector, which violated the equilibrium. The equilibrium can be restored by the market system in the process of regulating the production of goods through reduction in the number of workers in the production sector in the context of consumer demand. To restore the growth of production of goods and exit from the deflationary period, the central bank, at the cost of capital loaded in the sphere of capital production, should establish the amount of money in circulation that ensures the necessary level of inflation. The way out of deflation leads to a financial catastrophe with high unemployment and hyperinflation.

Keywords: economy, market, demand, supply, equilibrium, labor, capital, money, conjuncture, reproduction, investment, depreciation, inflation, deflation.