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Inflation and Deflation.
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Introduction Inflation and Deflation, in economics, terms used to describe, respectively, a decline or an increase in the value of money, in relation to the goods and services it will buy. Inflation is the pervasive and sustained rise in the aggregate level of prices measured by an index of the cost of various goods and services. Repetitive price increases erode the purchasing power of money and other financial assets with fixed values, creating serious economic distortions and uncertainty. Inflation results when actual economic pressures and anticipation of future developments cause the demand for goods and services to exceed the supply available at existing prices or when available output is restricted by faltering productivity and market constraints. Sustained price increases were historically directly linked to wars, poor harvests, political upheavals, or other unique events. Examples of inflation and deflation have occurred throughout history, but detailed records are not available to measure...
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