Deflation generally exerts negative impact on a country's economic conditions. This is because the advent of Deflation acts as a tax on the borrowers and the liquid asset holders simultaneously. This in turn, acts as a benefit, as far as the liquid cash and asset holders and the savers are concerned. Thus, Deflation is just the opposite economic situation to Inflation, levying tax on money lenders and holders, in the interest of short-term consumption and that of the borrowers. As per the contemporary economic thoughts, the concept of Deflation is associated with a certain amount of risk. Here, the risk-adjusted return of assets becomes negative in nature, thereby encouraging the purchasers and investors to gather money, rather than investing it in solid and assured securities. This leads to the formation of a theoretical condition known as Liquidity Trap. Liquidity trap is regarded as a critical condition as it stagnates the economy, where the nominal rate of interest becomes zero or close to zero.