Inflation has been interpreted different ways by many different people, with the details being all slightly different. However, the generally-accepted meaning for inflation is when there is a sudden, fast substantial increase in prices of gas, commodities, and all things purchasable. This increase in price consequently leads to a deterioration of the worth of money. For example, during a period of inflation, the price of a drink could rise from $2.00 to $7.00. This is an extortionate amount of money for a drink. However, across the board, all the prices are going up. Because of this, salaries go up too. Everyone is still paying the same amount for that drink - based relatively on what they earn, and the price of that drink in comparison to a smaller or larger-sized drink.
Deflation is exactly the opposite of everything that is Inflation. Deflation is the process whereby the price of purchasable goods goes down. The cost of everything drops, keeping their relative values to one another. This happens when the total expenditure of a community, country or business is not the same as the value of any output, at the current specified price. This means that the worth of money increases, while prices don't match, leading to decreased employment.
- How are Inflation and Deflation different?
Both inflation and deflation are not good; both are detrimental to society. However, inflation is considered the better instance. Inflation benefits the rich, and hits the poor when they're already down. However, deflation reduces the average income, and therefore affects every social class. This whole process will almost certainly lead to a Depression.