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In general, an expectation of falling prices in the near future
leads to current reductions in quantity demanded at every price, as
shown in the graph to the right. The size of this effect depends
on a number of things, but the direction can only be one way.
One important point to note is that we are not discussing the
demand for investment goods such as stocks, bonds, or other investment
items. The effect of expectations on demand for such goods, is
a good deal more complex. At this point, we are simply considering
the effect of changing expectations on the demand for goods purchased
because their consumption or ownership brings pleasure or "utility."
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