Selecting of Macro Economic Policies in Deflation

In recent years,chinese macro-economic operation has been experiencing a continuously declining of overall price level,a invariably downward trend of economic growth rate,and a slowdown of money supply,the combination of which signifies the existence of deflation.Not only does deflation restrain aggregate demand,but also impose a restriction on aggregate supply.In situation where the aggregate demand is insufficient,deflation can get economic growth under higher pressure.On the basis of examining the charateristics of and the cause resulting in deflation,this paper discusses the proper macro-economic policies,ones that combine and coordinate fiscal and monetary policies,to be chosen to alleviate deflation for a rapid growth of chinese national economy.