Question

What is the difference between inflation and deflation?

Answer 1

Inflation occurs when the price of goods and services rise, while deflation occurs when those prices decrease. The balance between the two economic conditions, opposites of the same coin, is delicate, and an economy can quickly swing from one condition to the other. I hope this helps

Answer 2

The correct answer is: "the direction of the generalized movement of prices"

Inflation is defined as the gradual and generalized increase in the prices of the goods and services commercialized in an economy. It decreases the real value of money, as if prices increase fewer products can be purchased.

On the other hand, deflation is defined as the gradual and generalized decrease in the prices of the goods and services commercialized in an economy. It is not desirable either, as constantly decreasing prices are the evidence of an economy with a weak demand-side.