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What is disinflation?
Though related deflation and disinflation are not synonymous, while deflation corresponds to decrease in the general price level in an economy, disinflation on the other hand means slowing in the rate of price rise or inflation. So, an increase in the ...
Explaining deflation considering recent events
In plain language, deflation is considered to be the time when prices are falling. More Often people tend to confuse deflation with either 'disinflation' or 'depression' (and the example is "the Great Depression"). While the three terms are related to each ...
What Causes Deflation?
Its best to explain the same with the following example. Let us assume that in a village there are only ten goods and ten Rs 10 notes are available to purchase them with. We can safely assume that each item ...
What happens to demand in deflation?
Now the next question would be: 'what would happen to demand for goods?' Since everyone in the village has one of the items. Hence, no one needs any more, so the conclusion would be that price will also fall as sellers ...
Summary causes for Deflation
There can be four possible reasons for deflation. They can even take place under any set of combination also. -Decreasing Money Supply-Increasing Supply of Goods-Decreasing Demand for Goods-Increasing Demand for Money Important Increasing demand or decreasing supply of money ...
Is Deflation Good or Bad?
It is neither good nor bad. What would matter is what has caused deflation? And whether people will suffer or rejoice? If the cause is increasing supply of goods that would be good like productivity went up and everything became ...
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