INFLATION & DEFLATION

INFLATION

• It occurs when the price of goods and services rises.

• EXAMPLE??

INFLATION

• Inflation is caused when goods and services are in high demand, thus creating a drop in avaibility .

• Consumer are willing to pay more for the item they want.

• It causes- manufacturer and service provider to pay more .

• Supplies can decrease for many reasons .• Ex. A natural disaster can wipe out a food crop.

DEFLATION

•Deflation occurs when prices of goods ,services decreases( more supply of goods in market) , when too many goods are available in market .•When there is not enough money circulating to purchase those goods.•Ex. Car-particular*

DEFLATION

• WHEN CREDIT providers detects a decrease in prices , they often reduces the amount of credit they offer.

• This create credit crunch where consumers cannot access loan to purchase big items.

• Thus leaving companies whit over stocked inventory and leading to further deflation.

• Deflation can lead to an economic ression or depression