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Inflation, Deflation,
       Stagflation &
           Reflation

                      By,
             Jagath Khatri
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”
Causes of Inflation
   Changes in money supply.

   Change in disposable income.

   Changes in business and consumer
    expenditure.

   Changes in demand of goods and services.
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.
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.
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
Effects of Deflation
    Decreasing nominal prices for goods &
    services.

   Increasing buying power of cash money.

   Decreased investment.

   Benefits recipient of fixed income.
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
Effects of Stagflation
   Reduction in the value of money

   Increase in prices of goods

   High Unemployment

   Poor economic growth

   Effect on fixed income group
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

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Inflation,deflation, stagflation , reflation [jagath]

  • 1. Inflation, Deflation, Stagflation & Reflation By, Jagath Khatri
  • 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