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2.1.2- Inflation
part a- understanding of
deflation
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Cards (6)
what is deflation?
rate
of
inflation falls below 0%
what is deflation a sign of?
economy
doing
badly
and
falling A.D
and
increased unemployment
what problem can deflation cause?
if consumers think
prices
are
falling
then they may
not
choose
to
spend
in the
hope prices fall further
how is there reduced Econ growth (deflation)
less spending
and
lower prices
mean
lower profits
for
firms
how can deflation be caused?
if
firms costs fall
(
new tech
) and
benefits
passed onto
consumers
in form of
lower prices
fall
of
prices
and indicates a
slowdown
in the
rate
of
growth
of
output
in the
economy
