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1.What are the consequences of sustained deflation?
First of all, we should understand the difference between 'bad deflation' and 'good deflation'
Good deflation means that the producers remain able to produce goods at lower prices by cutting the production costs, increase the productive efficiency. When the deflation becomes 'bad' it means that the businesses are no longer able to keep up with cost reductions.

So what are the consequences of this deflation?
It affect consumers behaviour. It may increase the consumers' purchasing power, as prices are falling.
But if the consumers expect even greater fall in prices later, it will stop them from buying goods = decrease their purchasing power. With the decline of aggregate demand, less goods will be produced which may also lead to unemployment in the long run.


How does deflation affect wealth?
The value of the householders' assets goes down, so householders' wealth decreases.



How does deflation affect debt?
Deflation increases all types of debt causing firm with large borrowings to fail.