What Is The Difference Between Inflation And Deflation?


6 Answers

Rory Copus Profile
Rory Copus answered
  • What is Inflation?
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.

  • What is Deflation?
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.
Muhammad Abdullah786 Profile
Inflation as we know is a state of rising prices over a long period of time. A rapid increase in prices has adverse effect on the economy.Deflation is a state of falling prices which too is harmful to the society and the economy. If one is given a choice between inflation and deflation, then the adoption perhaps is the worse. Inflation and deflation is inexpedient, but of the two perhaps deflation is the worse.

Inflation is unjust:
A rapid increase in prices unjust on the following grounds:
Inflation deprives the consumers of their purchasing power.
It brings a sort of artificial prosperity in the economy.
Inflation increases the inequalities in the society. It hurts the poor and gives benefits to the upper class.
It reduces savings and discourages investment in the economy.
It leads to diversion of resources from production of industrial goods to luxury goods.

Deflation is a situation whereby prices are falling in decline of output and employment in the economy. Deflation is condemned on the following grounds.
Due to fall in prices, the profit margin declines. There is considerable decrease in output and employment.
People reduce consumption activity anticipating further fall in the prices of goods.
Creditors no doubt gain during falling prices but they also have great of losing all or part of the economy.
Kristi W Profile
Kristi W answered
Inflation is when the price of something goes up and deflation is when the price goes down
Anonymous Profile
Anonymous answered
Inflation means increase in price level whereas deflation means decrease in price level means opposite of inflation.inflation brings inequality in price level .
naheed khan Profile
naheed khan answered
Inflation is the process in which there is continous increase in the general price level and the money is continusly losing its value.Inflation is defined as"a persistent and appreciable rise in general level or average of prices".Inflation is also a continued upward movement in the general level of prices.

Deflation is just the opposite of inflation.If there is a rise in the general level of prices so that the value of money declines.It is named as inflation.Conversely,if the general level of prices fall and as a result,the value of money increases,it is called deflation.

Reflation is a situation of a modrately rising general prices when efforts are made by the government to lift the economy out of depression.In reflation the rising prices are accompanied if a fire's in output and employment.
Anonymous Profile
Anonymous answered
I can't understand wats the major difference between inflation and deflation. Please kinldy explain the difference.

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