Whats the difference between inflation and deflation?
Sure, here's the difference between inflation and deflation:
Inflation
- A sustained increase in the general price level of goods and services in an economy.
- It can be caused by various factors, including increased demand, low supply, or a combination of both.
- When inflation is high, it can erode the value of savings and investments, making it more difficult for people to buy things with money they have saved.
- It can also lead to higher interest rates, as central banks may raise interest rates to slow down economic growth and control inflation.
Deflation
- A sustained decrease in the general price level of goods and services in an economy.
- It can be caused by various factors, including decreased demand, high supply, or a combination of both.
- When deflation is high, it can lead to lower prices for goods and services, making it easier for people to buy things with money they have saved.
- It can also lead to lower interest rates, as central banks may lower interest rates to stimulate economic growth and attract investment.