Inflation and Deflation

Paper Summary:

The paper explains that in the case of inflation, prices go up and the purchasing power goes down, whereas in the case of deflation, the prices go down and the purchasing power goes up. The paper examines the causes for inflation and deflation and their impact upon the production area of the economy. The paper defines three vital notions that help define the concepts of inflation and deflation: aggregate demand, short run aggregate supply and long run aggregate supply. The paper also looks at the policies of the Federal Reserve in preventing inflation and deflation from occurring.

Outline:
Executive Summary
Causes for Inflation and Deflation
Effects of Inflation and Deflation Damaging Economic Stability
AD, SRAS, LRAS
Policies of the Federal Reserve in Preventing Inflation and Deflation

From the Paper:

"The general and global economic environment, contemporarily called macroeconomics, is currently faced with two major threats: inflation and unemployment. The concept of inflation denotes a complex socio-economic phenomenon with major impacts upon all participants in the social and economic life. Due to the immense complexity of inflation, specialists in macroeconomics argue with regard to a set definition of the phenomenon. However, inflation could be described as a general and long term imbalance materialized in a discrepancy between the money stock and the overall volume of the products and services on the market."

Sample of Sources Used:

• Lipsey, Richard G., Chrystal, Alec K., Possitive Economy, Chapter 10: Inflation, Published by Weidenfeld & Nicolson in September 1989
• Yam, Joseph, Deflation (1): Causes ,Economic Forum, Hong Kong Monetary Authority, November 14, 2002, http://www.tdctrade.com/econforum/hkma/hkma021102.htm, last accessed on November 24, 2006
• Barol, David, Effects of deflation on stock market performance, Physician's News Digest, June 1999, http://www.physiciansnews.com/finance/699.html, last accessed on November 24, 2006
• Inflation Data, What is Deflation, 2004http://inflationdata.com/Inflation/Articles/Deflation.asp, last accessed on November 24, 2006
• Wikipedia, The Free Online Encyclopedia, Deflation (Economics), November 19, 2006 http://en.wikipedia.org/wiki/Deflation, last accessed on November 24, 2006

More papers on Inflation and Deflation:

• Term Paper # 125819 : "Inflation and Deflation"
• Research Paper # 96214 : "Inflation and Deflation"
• Analytical Essay # 8853 : "Inflation and Deflation"

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