Deflation
When the cost of goods and services decreases and purchasing power increases meaning customers can buy more with less.
This is caused by :
• Increase in productivity of goods and services
• A decrease in demand
• A decrease in the supply of money and credit
Although this might seem like a positive scenario it may also indicate a weakening economy.
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Inflation in a nutshell : Credit to Karla Brown
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Similar ideas to Deflation
Cost-Push Inflation
Cost-push inflation is the decrease in the aggregate supple of goods and services stemming from an increase in the cost of production.
An increase in the costs of raw materials or labor can contribute to cost-pull inflation.
Demand shock
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