【正确答案】As deflation is caused by varied factors, the ways to deal with deflation should be diversified. Generally speaking, deflation is handled with the following measures; 　　(1) Expansionary macroeconomic policies 　　In order to enhance the aggregate demand and prevent an economy from sliding into recession when there is a deflation, expansionary monetary and fiscal policies should be applied. On one hand, expansionary monetary policy is used to stimulate effective demand; on the other hand, expansionary, fiscal policy increases government spending to make up insufficient investment in the private sector. During deflation expansionary, fiscal policy is more effective in stimulating the aggregate demand, while monetary policy in short run is slow to show effects which also depends on enterprise and household demand. From 1998 to 2002, the Chinese government raised RMB 6, 600 billion by issuing national debts and the funds have been used in infrastructure construction and played a very important part in increasing the aggregate demand and in gaining an average growth rate of 7. 5%，under the influence of many unfavorable economic variables. 　　(2) Adjustment of production structure 　　The direct cause of deflation is insufficient effective demand. Insufficient effective demand and excess supply are two sides of a coin. Not only demand should be stimulated, but also excess supply or excess production capacity should be tackled in solving the problem of insufficient demand. As the structural defects of supply causes excess supply, adjustment of production structure is needed in order to weed out excess supply or excess productive capacity. As for adjustment of industrial structure, it is important to escalate industrial structure and find new source of economic growth and form new consumption demand. Meanwhile, foreign markets should be developed and export should be promoted. Usually when there exists excess production capacity, there will be malignant competition in the market. In order to seize market share, there will be continuous price competition so the profit of the whole industry will decline. During the process of fierce competition, some enterprises will be forced to exit the market and there will be more mergers and acquisitions. After that, the malignant market competition will be controlled and price fall caused by the malignant market competition can be possibly avoided. 　　(3) Other counter-measures of deflation 　　Besides the measures mentioned above, the policy of wage and price control is one of countermeasures against deflation. During deflation, a plan to raise wage and prevent prices from declining can be carried out, which has the opposite effect of wage-price guideline during inflation. A government can also intervene stock market with certain policy to push up stock price, which will lead to people's optimistic expectation of future and appreciation of book value of financial assets, hence the effect of wealth increase. In this case, the propensity of consumption of households will be enhanced. 　　So far, some achievements on the study of deflation have been made, but more efforts are needed to look deeply into this economic phenomenon.