Is deflation "worse" than inflation?

Is deflation "worse" than inflation?
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Answer :

When you are in a period of deflation people hold off buying goods and services on the sure knowledge that if they wait a while those goods will be available at a lower price. This then decreases trade and the flow of money which results in people lowering prices yet further to attract trade and you can then end up in a deflationary spiral. Is it worse than inflation? Yes, all economies depend on a certain level of inflation. The problems with inflation arise when you enter a period of hyperinflation as was seen recently in Zimbabwe and very famously in the inter war period in Germany where people burnt bank notes to keep warm as they were so worthless in comparison to wood and coal as fuel.
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Related questions

Stagflation refers to a situation which is characterized by - (1) stagnant employment and deflation (2) deflation and rising unemployment (3) inflation and rising employment. (4) inflation and rising unemployment

Description : Stagflation refers to a situation which is characterized by - (1) stagnant employment and deflation (2) deflation and rising unemployment (3) inflation and rising employment. (4) inflation and rising unemployment

Last Answer : (4) inflation and rising unemployment Explanation: Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high ... economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.

Stagflation is a situation of - (1) stagnation and deflation (2) stagnation and recession (3) stagnation and inflation (4) stagnation and recovery

Description : Stagflation is a situation of - (1) stagnation and deflation (2) stagnation and recession (3) stagnation and inflation (4) stagnation and recovery

Last Answer : (3) stagnation and inflation Explanation: Stagflation is a situation of stagnation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. Stagflation occurs ... t growing but prices are, which is not a good situation for a country to be in

When too much money is chasing too few goods, the situation is - (1) deflation (2) inflation (3) recession (4) stagflation

Description : When too much money is chasing too few goods, the situation is - (1) deflation (2) inflation (3) recession (4) stagflation

Last Answer : (2) inflation Explanation: Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and ... few goods", since only money that is spent on goods and services can cause inflation.

Pump priming should be resorted to at a time of? (1) Inflation (2) Deflation (3) Stagflation (4) Reflation

Description : Pump priming should be resorted to at a time of? (1) Inflation (2) Deflation (3) Stagflation (4) Reflation

Last Answer : (2) Deflation Explanation: Pump priming is the action taken to stimulate an economy, usually during a recessionary/deflationary period, through government spending, and interest rate and tax reductions. ... the injection of funds, with the goal of prompting higher demand for goods and services.

When too much money is chasing too few goods, the situation is - (1) Deflation (2) Inflation (3) Recession (4) Stagflation

Description : When too much money is chasing too few goods, the situation is - (1) Deflation (2) Inflation (3) Recession (4) Stagflation

Last Answer : (2) Inflation Explanation: Inflation occurs when too much money is chasing too few goods. The prevailing view in mainstream economics is that inflation is caused by the interaction of the supply of ... prices is a result from an increase in the supply of money by central banking authorities.

Beyond a certain point deficit financing will certainly lead to - (1) inflation (2) deflation (3) recession (4) economic stagnation

Description : Beyond a certain point deficit financing will certainly lead to - (1) inflation (2) deflation (3) recession (4) economic stagnation

Last Answer : (1) inflation Explanation: Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds ... increasing the money supply and the purchasing power of the people which increases the aggregate demand.

Stagflation refers to a situation which is characterised by (1) stagnant employment and deflation (2) deflation and rising unemployment (3) inflation and rising employment. (4) inflation and rising unemployment

Description : Stagflation refers to a situation which is characterised by (1) stagnant employment and deflation (2) deflation and rising unemployment (3) inflation and rising employment. (4) inflation and rising unemployment

Last Answer : inflation and rising unemployment

Stagflation is a situation of (1) stagnation and deflation (2) stagnation and recession (3) stagnation and inflation (4) stagnation and recovery

Description : Stagflation is a situation of (1) stagnation and deflation (2) stagnation and recession (3) stagnation and inflation (4) stagnation and recovery

Last Answer :  stagnation and inflation

When too much money is chasing too few goods, the situation is (1) deflation (2) inflation (3) recession (4) stagflation

Description : When too much money is chasing too few goods, the situation is (1) deflation (2) inflation (3) recession (4) stagflation

Last Answer : inflation

Beyond a certain point deficit financing will certainly lead to (1) inflation (2) deflation (3) recession (4) economic stagnation

Description : Beyond a certain point deficit financing will certainly lead to (1) inflation (2) deflation (3) recession (4) economic stagnation

Last Answer : inflation

Pump priming should be resorted to at a time of ? (1) Inflation (2) Deflation (3) Stagflation (4) Reflation

Description : Pump priming should be resorted to at a time of ? (1) Inflation (2) Deflation (3) Stagflation (4) Reflation 

Last Answer : Deflation

What is the difference between inflation and deflation?

Description : What is the difference between inflation and deflation?

Last Answer : I don’t think there is any difference, they are the same.

Development means economic growth plus (1) Inflation (2) Deflation (3) Price stability (4) Social change

Description : Development means economic growth plus (1) Inflation (2) Deflation (3) Price stability (4) Social change

Last Answer : (4) Social change

In India, Inflation measured by the : A. National Income Deflation B. Wholesale Price Index number C. Consumer Price Index D. None of above

Description : In India, Inflation measured by the : A. National Income Deflation B. Wholesale Price Index number C. Consumer Price Index D. None of above

Last Answer : C. Consumer Price Index

Economic growth is normally coupled with? A. Inflation B. Hyper Inflation C. Deflation D. Stagflation

Description : Economic growth is normally coupled with? A. Inflation B. Hyper Inflation C. Deflation D. Stagflation

Last Answer : A. Inflation

Development means economic growth with: A. Price Stability B. Social Change C. Inflation D. Deflation

Description : Development means economic growth with: A. Price Stability B. Social Change C. Inflation D. Deflation

Last Answer : B. Social Change

Will the U.S. economy see hyperinflation, or deflation followed by hyperinflation?

Description : Will the U.S. economy see hyperinflation, or deflation followed by hyperinflation?

Last Answer : There are several approaches to correcting our current monetary situation. I personally hope we don't see hyperinflation at all because we are weaning ourselves off the Fed and taking responsibility for our ... Iraq, using that money for infrastructure, and weaning America off the Fed bill by bill.

Deflation is a situation in which - (1) The value of money is falling. (2) The price of goods is increasing. (3) The value of money is increasing. (4) The price level is stagnant.

Description : Deflation is a situation in which - (1) The value of money is falling. (2) The price of goods is increasing. (3) The value of money is increasing. (4) The price level is stagnant.

Last Answer : (3) The value of money is increasing. Explanation: Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused ... conversely, deflation increases the real value of money - the currency of a national or regional economy.

When there is an official change in the exchange rate of domestic currency, then it is called (1) Appreciation (2) Depreciation (3) Revaluation (4) Deflation

Description : When there is an official change in the exchange rate of domestic currency, then it is called (1) Appreciation (2) Depreciation (3) Revaluation (4) Deflation

Last Answer : (2) Depreciation Explanation: Revaluation is a calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold ... . central bank) can alter the official value of the currency. It is opposite of devaluation.

Deflation is a situation in which (1) The value of money is falling. (2) The price of goods is increasing. (3) The value of money is increasing. (4) The price level is stagnant.

Description : Deflation is a situation in which (1) The value of money is falling. (2) The price of goods is increasing. (3) The value of money is increasing. (4) The price level is stagnant.

Last Answer : The value of money is increasing.

When there is an official change in the exchange rate of domestic currency, then it is called : (1) Appreciation (2) Depreciation (3) Revaluation (4) Deflation

Description : When there is an official change in the exchange rate of domestic currency, then it is called : (1) Appreciation (2) Depreciation (3) Revaluation (4) Deflation

Last Answer : Revaluation

Inflation occurs when aggregate supply is - (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these

Description : Inflation occurs when aggregate supply is - (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these

Last Answer : (2) less than aggregate demand Explanation: If the supply is less than the demand, the price will increase. Inflation, the persistent increase in the average price level, can be ... Translating this to the macro-economy suggests that inflation occurs when aggregate demand exceeds aggregate supply.

4. For which of the following reasons might inflation cause Real GDP to grow slower than it otherwise would? a. Inflation makes everyone poorer b. Inflation reduces the value of consumer debt c. Inflation increases business investment spending d. Inflation decreases savings in financial form

Description : 4. For which of the following reasons might inflation cause Real GDP to grow slower than it otherwise would? a. Inflation makes everyone poorer b. Inflation reduces the value of consumer debt c. Inflation increases business investment spending d. Inflation decreases savings in financial form

Last Answer : d. Inflation decreases savings in financial form

Inflation occurs when aggregate supply is (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these

Description : Inflation occurs when aggregate supply is (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these 

Last Answer :  less than aggregate demand

Would inflation happen if every country printed equal amounts of currency?

Description : Would inflation happen if every country printed equal amounts of currency?

Last Answer : Inflation would happen no matter what.

Since 2008, the Fed has tripled the monetary base: why is there so little inflation?

Description : Since 2008, the Fed has tripled the monetary base: why is there so little inflation?

Last Answer : answer:Because the value of shit has tripled as well during that time. Currency equal value of stuff. = No inflation. If more currency than stuff, then we get inflation. If less currency than stuff ... is equal to the perceived value of goods and service in an economy, there should be no inflation.

What causes inflation?

Description : What causes inflation?

Last Answer : for really good, clear explanations of economic ideas for the uninitiated, try "economics explained" by robert heilbrun.

How do you determine if something is keeping up with the rate of inflation?

Description : How do you determine if something is keeping up with the rate of inflation?

Last Answer : Short it depends. Essentially, based on your numbers, the Peace Corps readjustment allowance has gone up 300% (or 3 times). The inlfation calculator at inflationdata.com says that since 1961 prices have inflated ... coming out in March of 1976 but less than if you were coming out in Jan of 1961.

During periods of inflation, tax rates should - (1) increase (2) decrease (3) remain constant (4) fluctuate

Description : During periods of inflation, tax rates should - (1) increase (2) decrease (3) remain constant (4) fluctuate

Last Answer : (1) increase Explanation: In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. In other words, inflation means continuously ... To control inflation there should be an increase in the tax rate and increase in the interest rate.

)A very high rise in National Income at current market prices and a low rise at constant prices reveals - (1) the high rate of growth in the economy at the current period (2) the increased production in the current period (3) the improper growth of the economy (4) the high rate of inflation prevailing in the economy

Description : )A very high rise in National Income at current market prices and a low rise at constant prices reveals - (1) the high rate of growth in the economy at the current period (2) the increased ... period (3) the improper growth of the economy (4) the high rate of inflation prevailing in the economy

Last Answer : (3) the improper growth of the economy Explanation: When national output is multiplied by present ruling price, we obtain national income at current prices. On the other hand if the national output is ... not indicate increase in product or output, but is rather due to the rise in price level.

'Galloping Inflation' is also known as - (1) Walking Inflation (2) Running Inflation (3) Hyper Inflation (4) Creeping Inflation

Description : 'Galloping Inflation' is also known as - (1) Walking Inflation (2) Running Inflation (3) Hyper Inflation (4) Creeping Inflation

Last Answer : (3) Hyper Inflation Explanation: When prices rise between 20% to 100% per annum or even more, it is called galloping or hyperinflation. Such a situation brings a total collapse of the monetary ... power of money. Galloping inflation has adverse effect on middle and low income groups in the society.

The basis of determining dearness allowance to employees in India is - (1) National Income (2) Consumer Price Index (3) Standard of Living (4) Inflation Rate

Description : The basis of determining dearness allowance to employees in India is - (1) National Income (2) Consumer Price Index (3) Standard of Living (4) Inflation Rate

Last Answer : (2) Consumer Price Index Explanation: The Consumer Price Index Numbers for Industrial Workers CPI (1W) is utilized for fixation and revision of wages and determination of variable Dearness ... utilized as an indicator for measuring inflationary trend in the country and for policy formulations.

As a result of higher rate of inflation in India, the U.S. dollar will - (1) Depreciate (2) Constant (3) Negligible (4) Appreciate

Description : As a result of higher rate of inflation in India, the U.S. dollar will - (1) Depreciate (2) Constant (3) Negligible (4) Appreciate

Last Answer : (4) Appreciate Explanation: A relatively higher rate of inflation causing rise in prices of the goods in India as compared to those in the USA will make US goods relatively cheaper and the Indian ... rate of inflation in India, the US dollar -will appreciate and the Indian rupee will depreciate.

Which of the following best indicates economic growth of a Nation? (1) Agriculture income (2) Per capita income (3) Gross industrial production (4) Inflation

Description : Which of the following best indicates economic growth of a Nation? (1) Agriculture income (2) Per capita income (3) Gross industrial production (4) Inflation

Last Answer : (2) Per capita income Explanation: Some economists believe that economic growth is meaningless if it is not distributed across different segments of population. So per capita income is considered by ... Gross Domestic Product (GDP) is the most comprehensive measure of over-all economic performance.

The process of curing inflation by reducing money supply is called - (1) Cost-push inflation (2) Demand-pull inflation (3) Disinflation (4) Reflation

Description : The process of curing inflation by reducing money supply is called - (1) Cost-push inflation (2) Demand-pull inflation (3) Disinflation (4) Reflation

Last Answer : (3) Disinflation Explanation: Disinflation is a decrease in the rate of inflation -a slowdown in the rate of increase of the general price level of goods and services in a nation's gross ... a very short period of time. Disinflation takes place only when an economy is suffering from recession.

Inflation can be checked by - (1) increasing exports (2) increasing money supply (3) increasing Government expenditure (4) decreasing money supply

Description : Inflation can be checked by - (1) increasing exports (2) increasing money supply (3) increasing Government expenditure (4) decreasing money supply

Last Answer : (4) decreasing money supply Explanation: The technical and most often used way to control inflation is by tightening the money supply. The logic goes that when people do not have excess money, ... . Most central banks use high interest rates as the traditional way to fight or prevent inflation.

Which curve shows the inverse relationship between unemployment and inflation rates? (1) Supply curve (2) Indifference curve (3) IS curve (4) Phillips curve

Description : Which curve shows the inverse relationship between unemployment and inflation rates? (1) Supply curve (2) Indifference curve (3) IS curve (4) Phillips curve

Last Answer : (4) Phillips curve Explanation: The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, ... unemployment rate is on the x-axis and the inflation rate is on the y-axis.

Inflation is a situation characterized by (1) Too much money chasing too few goods (2) Too few money chasing too much goods (3) Too many people chasing too few goods (4) Too many people chasing too little money

Description : Inflation is a situation characterized by (1) Too much money chasing too few goods (2) Too few money chasing too much goods (3) Too many people chasing too few goods (4) Too many people chasing too little money

Last Answer : (1) Too much money chasing too few goods Explanation: Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross ... the Phillips curve. This is commonly described as "too much money chasing too few goods."

Which of the following can be used for checking inflation temporarily? (1) Increase in wages (2) Decrease in money supply (3) Decrease in taxes (4) None of these

Description : Which of the following can be used for checking inflation temporarily? (1) Increase in wages (2) Decrease in money supply (3) Decrease in taxes (4) None of these

Last Answer : (2) Decrease in money supply Explanation: An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. India ... those in the other developed countries. Economists claim that an increase in money supply alone constitutes inflation.

Which of the following groups suffer the most from inflation? (1) Debtros (2) Creditors (3) Business class (4) Holders of real assets

Description : Which of the following groups suffer the most from inflation? (1) Debtros (2) Creditors (3) Business class (4) Holders of real assets

Last Answer : (2) Creditors Explanation: Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth ... substantial debt, each dollar one has to repay would be worth less than when it was borrowed.

In a period of inflation and price rises the supply of money remains - (1) the same (2) increases (3) decreases (4) increases or decreases pro-portionately.

Description : In a period of inflation and price rises the supply of money remains - (1) the same (2) increases (3) decreases (4) increases or decreases pro-portionately.

Last Answer : (2) increases Explanation: Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity ... money-supply growth, at least for rapid increases in the amount of money in the economy.

'Residex' is associated with - (1) Share prices (2) Price inflation (3) Mutual fund prices (4) Land prices

Description : 'Residex' is associated with - (1) Share prices (2) Price inflation (3) Mutual fund prices (4) Land prices

Last Answer : (4) Land prices Explanation: The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It ... information gap and to streamline the process of development of property in various cities across the country.

Inflation redistributes income and wealth in favour of : (1) Pensioners (2) Poor (3) Middle class (4) Rich

Description : Inflation redistributes income and wealth in favour of : (1) Pensioners (2) Poor (3) Middle class (4) Rich

Last Answer : (4) Rich Explanation: A group of economists including Keynes is of the opinion that 'inflation, in one form or the other, is a factor which helps economic growth. Usually, it is argued that ... margin-al propensity to consume of the wage- earners because of their near-subsistence level of income.

Lorenz curve shows - (1) Inflation (2) Unemployment (3) Income distribution (4) Poverty

Description : Lorenz curve shows - (1) Inflation (2) Unemployment (3) Income distribution (4) Poverty

Last Answer : (3) Income distribution Explanation: In economics, the Lorenz curve is a graphical representation of the distribution of income or of wealth. It was developed by Max O. Lorenz in 1905 for ... of wealth distribution; the Lorenz curve lies beneath it, showing the reality of wealth distribution.

State which of the following is correct? The Consumer Price Index reflects - (1) the standard of living (2) the extent of inflation in the prices of consumer goods (3) the increasing per capita income (4) the growth of the economy

Description : State which of the following is correct? The Consumer Price Index reflects - (1) the standard of living (2) the extent of inflation in the prices of consumer goods (3) the increasing per capita income (4) the growth of the economy

Last Answer : (2) the extent of inflation in the prices of consumer goods Explanation: A consumer price index (CPI) measures changes in the price level of consumer goods and services purchased by households ... , pensions, for regulating prices and for deflating monetary magnitudes to show changes in real values.

Inflation is caused by - (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Description : Inflation is caused by - (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Last Answer : (1) increase in money supply and decrease in production Explanation: Economists generally agree that in the long run, inflation is caused by increases in the money supply. According to the theory of ... few goods. The increase in money supply is not matched by the equivalent production of goods.

Countries that depend mainly on the export of primary products for their income, are prone to - (1) inflation (2) economic instability (3) increasing unemployment (4) stable economic growth

Description : Countries that depend mainly on the export of primary products for their income, are prone to - (1) inflation (2) economic instability (3) increasing unemployment (4) stable economic growth

Last Answer : (3) increasing unemployment Explanation: Most of the world's poorest countries depend for increasing export earnings on agricultural products that are vulnerable to fluctuating or declining terms of ... primary products were hit particularly hard by falling commodity prices between 1980 and 1984.

The supply-side measure to control inflation is - (1) Reducing public expenditure (2) Price control through Public Distribution System (3) Higher taxation to mop up liquidity (4) Credit control

Description : The supply-side measure to control inflation is - (1) Reducing public expenditure (2) Price control through Public Distribution System (3) Higher taxation to mop up liquidity (4) Credit control

Last Answer : (2) Price control through Public Distribution System Explanation: The issue of inflation is addressed from both demand and supply sides. demand management is achieved by measures such as postponing public expenditure ... rice and wheat resorted to by FCI from its buffer stock in times of price rise.

"Dear Money" means - (1) low rate of interest (2) high rate of interest (3) depression (4) inflation

Description : "Dear Money" means - (1) low rate of interest (2) high rate of interest (3) depression (4) inflation

Last Answer : (2) high rate of interest Explanation: Dear Money, also known as tight money, is money which has to be borrowed at a high interest rate, and so restricts expenditure by companies. This situation ... supply and demand. Businesses may have a tough time raising capital during a period of dear money.

From the national point of view, which of the following indicates micro approach? (1) Study of sales of mobile phones by BSNL (2) Unemployement among Women (3) Per capita income in India (4) Inflation in India

Description : From the national point of view, which of the following indicates micro approach? (1) Study of sales of mobile phones by BSNL (2) Unemployement among Women (3) Per capita income in India (4) Inflation in India

Last Answer : (1) Study of sales of mobile phones by BSNL Explanation: Macroeconomics is a branch of economics in which a variety of economy-wide phenomena is thoroughly examined such as, inflation, price levels, rate ... and firms. So the study of sales of mobile phones by BSN I, comes under microeconomics.