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And deflation isnt easy to fix.
Deflation. Will most people even notice 7 inflation a year. Deflation is not a routine feature of the economic cycle which is marked by alternating periods of expansion and contraction against a backdrop of steadily rising prices. These directions of travel means inflation is highly likely. Rather deflation is a sign that something is seriously out of whack with the economy.
This allows more goods and services to be bought than before with the same amount of currency. In times of deflation the purchasing power of currency and wages are. A reduction in money supply or credit availability is the reason for deflation in most cases. Nevertheless there is often a link between monetary and price deflation so monitoring the annual percentage change in consumer prices is useful.
Deflation is a widespread fall in prices just as inflation is a widespread increase in prices. When the overall price level decreases so that inflation rate becomes negative it is called deflation. The proper definition of inflation or deflation refers to the monetary side. In economics deflation is a decrease in the general price level of goods and services.
Inflation is an increase in the general prices of goods and services in an economy. That is an expansion or contraction in the amount of money and credit in an economy. Deflation occurs when the inflation rate falls below 0 a negative inflation rateinflation reduces the value of currency over time but sudden deflation increases it. In theory modest deflation could aid an economic recovery by making goods and services cheaper.
Deflation is a contraction in the supply of circulated money within an economy and therefore the opposite of inflation. Deflation occurs when asset and consumer prices fall over time. Reduced investment spending by government or individuals may also. Deflation is what most forecasters are expecting to see in the aftermath of this crisis.
While this may seem like a great thing for shoppers the actual cause of widespread deflation is a long term drop in demand. It ought to be expected given the precedent set in the aftermath of the last global economic downturn.
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