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RE: Does Deflation Spur Consumption? (Contrary to conventional Wisdom)

in #economics8 years ago

There is real inflation/deflation and price inflation/deflation.
Real inflation/deflation is directly tied to money supply. When there is more money, it is inflation. When there is less, it's deflation. It really is that simple. Generally speaking, money loses buying power during inflation and gains buying power during deflation. Other factors might change that and it's not equal across all sectors or products/services, due to the forces of supply and demand.
Price inflation/deflation is simply a change in the price. If it goes up, it's inflationary. If it goes down, it's deflationary. This is almost invariably tied to the forces of supply and demand.
There is a great deal of confusion regarding this, because economists (and wannabees) often simply use the term "inflation" to refer to rising prices. That's inaccurate. They should refer to this as price inflation.

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