Difference Between Inflation And Inflation

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INFLATION
1. Inflation happens in an economy when there is a rise of level of goods and services, due to an increase in the volume of money in an economy over a period of time. It is also referred to as an (erosion) in the value of an economy’s currency. When inflation is high, it affects the entire economy. Consumers are not able to afford the goods and services because of the high prices. Additionally, when the price level of goods and services increase, the value of currency reduces. Meaning, that each unit of currency buys fewer goods and services.

2. The different types of inflation are:
 Demand pull inflation – This occurs when there is a high result of consumer demand. The prices increase for the same goods and services, when consumers are trying …show more content…

Deflation- A general decline in prices, often caused by reduction in the supply of money or credit. Also, it can be because of a decrease in investment, government and personal spending. This is the opposite of Inflation. (A fall in the general price level).
Disinflation – The process of reversing inflation without creating unemployment or reducing the output in the economy. It is a deliberate attempt to counter a highly inflationary situation. (A decrease in the rate of inflation).
Nevertheless, the differences between reflation and stagflation are because reflation is a rise in the rate of inflation while the prices were not rising and stagflation is more serious, when the economy becomes stagnant, but still experiences inflation. In addition, the differences between deflation and disinflation are that deflation can be both manmade and natural. Disinflation is always planned and is based on the government policy. Deflation always emerges in the form of depression and disinflation price level comes to normal

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