Deflation more dangerous than Inflation
Inflation This term has been the maximum time used by most of the investors, traders, experts and almost everyone related to market. So emphasizing on this will be just a wastage of time, and straightway i will discuss the impact.
Inflation
Inflation certainly have a negative impact if it raises beyond the purchasing capacity but to some extent it is required for the ecomonic development and to maintain the strength of currency.
Deflation
Major topic to discuss is about deflation which is certainly more dangerous to the economy as if the purchasing power increases and the product is less in that ratio the strength of currency decreases leading to a topple in macro- economic system.
Let me add a story there were two people one was habitual drinker and lost everything but he had a collection of bottles of the drink, other was a miser businessman and made heavy cash by its business, suddenly there were deflation and all the cash collected by businessman was much much less valued than the bottles collected by the drinker.
Several countries like Japan, Brazil have a very high inflation number but developing very fast and the market are on the run, Zimbabwe has very very high inflation no.
Affect of Inflation and deflation on economy
Conclusion is that inflation is certainly not good due to variation in the income group, but deflation is much more dangerous as the value of your money gets down. Thus a balanced inflation rate is always good for growth of the countries economy.
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