What is inflation? What is deflation? What causes each?

Inflation is an economic phenomenon in which the prices of goods and services rise over time. It is caused by an increase in the money supply, or when demand for goods and services outstrips the supply of goods and services.

Deflation is an economic phenomenon in which the prices of goods and services fall over time. It is caused by a decrease in the money supply, or when the supply of goods and services outstrips the demand for them.

An example of inflation is when a country experiences economic growth and wages rise, leading to an increase in consumer spending and an increase in prices.

An example of deflation is when a country experiences economic recession and wages fall, leading to a decrease in consumer spending and a decrease in prices.

Another example of inflation is when the government prints more money, leading to an increase in the money supply and an increase in prices.

Another example of deflation is when banks increase their reserve requirements, leading to a decrease in the money supply and a decrease in prices.

Inflation and deflation can also be caused by changes in the supply and demand of commodities, such as oil and gold.

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