Step 1: Define negative feedback.
Negative feedback occurs when a portion of the output is subtracted from the input. It reduces the effective input.
Step 2: Effect on gain.
With negative feedback, the system's open-loop gain reduces: \[ A_{closed} = \frac{A}{1 + A \beta} \] So gain decreases.
Step 3: Effect on stability.
Negative feedback helps suppress oscillations, improve damping, and correct errors, making the system more stable.
Conclusion: $\boxed{\text{gain decreases, stability increases}}$