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Chapter 9: Q 18. (page 243)

What is deflation?

Short Answer

Expert verified

It is just the opposite of inflation.

Step by step solution

01

Step 1. Introduction

When the price level in the economy increases because of several reasons such as increase in money supply,it is known as inflation.

02

Step 2. Explanation

Deflation is just the antonym of inflation. as inflation is the increase in average prices and deflation is the decrease in average prices. it is to be noted that in deflation consumers are benefitted.

Deflation is a decrease in the average prices of goods and services.in the time of deflation the purchasing power of money increases which means we can buy more with the same amount of money as compared to the past.

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Most popular questions from this chapter

How to Measure Changes in the Cost of Living introduced a number of different price indices. Which price index would be best to use to adjust your paycheck for inflation?

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Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the CPI to convert from nominal to real would be more appropriate than using the GDP deflator.

How do economists use a basket of goods and

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Name several forms of indexing in the private and

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