Supply-side deflation caused by productivity growth is likely to have harmful consequences than demand-side deflation because it is disruptive to labor markets.

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Explanation:

Supply-side deflation caused by productivity growth is more likely to have harmful consequences than demand-side deflation because it is more disruptive to labor markets.

Supply side deflation caused by productivity growth means that the prices of goods and services are falling because producers are producing more than there is a demand for and so prices have to be cut in order to get people to buy more.

This will have harmful effects on the labor markets because companies would have to reduce the number of people they hire in order to maintain some sort of profitability thereby increasing unemployment in the country.

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