2. Inflation
Meaning;
Inflation is a rise in general level of prices of
goods & service in an economy over a period of
time.
Definition;
Crowther- defines inflation as “a state in which
the clause of money is falling i.e., prices are
rising.
Prof.Coulbourn- defines inflation as “too much
of money chasing too few goods”
3. Causes of Inflation
Changes in money supply.
Change in disposable income.
Changes in business and consumer
expenditure.
Changes in demand of goods and services.
4. Effects of Inflation
Effect on production and employment.
Effect on fixed income group.
Effect on debtors and creditors.
Effect on wage and salary earners.
Effect on farmers.
5. Deflation
Meaning;
Deflation is a decrease in the general price
level of goods and services.
It occurs when the inflation rate falls below 0%.
It increases the real value of money of a nation,
this allows one to buy more goods with same
amount of money.
6. Causes of Deflation
Shift in supply & demand curve.
Reduction in money supply.
Technological development.
Increases in supply of goods & Decrease in supply
of money.
Cash building.
Fall in demand causes fall in price
7. Effects of Deflation
Decreasing nominal prices for goods &
services.
Increasing buying power of cash money.
Decreased investment.
Benefits recipient of fixed income.
8. Stagflation
Meaning;
Stagflation is a combination of Stagnation &
Inflation, a situation where an inflation rate is
high, the economic growth rate slows down, &
unemployment remains steadily high.
Causes;
Supply Shock
Inappropriate macro economics policies
9. Effects of Stagflation
Reduction in the value of money
Increase in prices of goods
High Unemployment
Poor economic growth
Effect on fixed income group
10. Reflation
Meaning;
Reflation is the act of stimulating the economy
by increasing the money supply or by reducing
taxes, there by seeking to bring the economy
back up to the long-term trend, following a dip in
the business cycle.
Reflation is considered to be an antidote to
deflation