[jakarta]

Let's say you operate a business in a deflationary economy, such as Japan. Deflation --> Prices go down.

Yes, consumers will be paying less for goods, this is true, and on the surface seems good, but dig a little deeper. When deflation strikes an economy, almost all businesses are affected. That is why economists worry so much about it and are willing to use inflation to combat deflation.

Think about it: The beef bowl restaurant has lower prices, so they make less money. They will be unable to keep on as many employees, they won't have the excess capital to use for expansion, they will have less money to give suppliers, might not be able to pay rent... employees who are fired will be without incomes so they wont be able to take advantage of lowered prices. These are the ripple effects you need to look at.

The reason people fear deflation is because it is able to rapidly spread throughout the economy and infect almost any business.

http://en.wikipedia.org/wiki/Deflation#Deflation_in_Japan

^ you can read more about the deflation problem in Japan.