Deflation Definition Deflation is defined as a decrease in the general price level. It is a negative inflation rate. Deflation means the value of money will increase. Deflation is often associated with periods of negative or stagnant economic growth (Great Depression, Japanese economy in the 1990s, early 2000s). In fact, deflation is often used to …
Readers Question: Why are more students going to university, despite the increased costs associated with higher education The number of students in full time education has dramatically increased in the past few decades. In the 1960s and 1970s, a full time university degree was a minority choice, but it has become increasingly popular. It is …
Readers Question: How can a developing country grow without inflation? Economic growth can lead to inflation, for example, if demand rises faster than productive capacity, then we will see rising prices. However, economic growth is compatible with low inflation, and developing economies which can increase productive capacity and general efficiency can see rising living standards …
When food prices rise in the developed world, it is an inconvenience, something to grumble about. But, when food prices rise in the developing world, it can make a difference between going hungry and getting enough to eat. Food inflation is volatile. Agricultural prices tend to fluctuate because demand and supply are both inelastic and …
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Readers Question: Is there an inbuilt deflationary bias in the Eurozone? Note: I originally wrote this post in 2010. Unfortunately, every year there is a reason to update the post and suggest the deflationary bias in the Eurozone keeps getting stronger. Deflationary bias means that there is a tendency for economic policy to promote lower …
A look at the relationship between inflation and unemployment and whether there is a trade off as suggested by Phillips Curve.