Questions and misconceptions about deflation
Forgive me, I’m not an economist, but I am a working woman and a taxpayer and a consumer. Lowering prices does NOT encourage us to put off spending…if I see something I want or need for a lower price...
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GDP deflator
GDP deflator (implicit price deflator for GDP) is a measure of the level of prices of all new, domestic goods and services in an economy. The GDP deflator regularly updates the type of goods and...
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Causes of deflation
Readers Question: What is the cause of deflation? Deflation involves a fall in the price level – a negative rate of inflation. From a very basic standpoint, there are two main potential causes of...
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Causes of Europe’s deflation problem
The European Union is facing the prospect of a serious bout of deflation (or at least, very low rates of inflation / disinflation) Deflation occurs when prices fall. But, very low rates of inflation...
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Problems of Deflation
Deflation is defined as a fall in the general price level. It is a negative rate of inflation. It means the value of money increases rather than decreases. Deflation is not necessarily bad, but often...
View ArticleInflation target during deflation
Readers Question: How does inflation targeting operate when there is a deflation? and what are the problems associated with this? It’s a good question to ask at the moment, especially with regard to...
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Policies to solve deflation / low inflation
Deflation means a fall in prices (a negative inflation rate). Policy makers should generally be concerned if there is an inflation rate of less than the target of 2%. For example, in the Eurozone Jan...
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Deflationary Bias in the Eurozone
Readers Question: Is there an inbuilt deflationary bias in the Eurozone? Note: I originally wrote this post in 2010. Unfortunately, every year there is a reason to update the post and suggest the...
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Types of deflation
Readers Question: I have just been reading your opinion on deflation. You say generally it’s bad unless it is caused by production and technology improvement. My question is this, how would the...
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Impact of falling oil prices
In recent months the price of crude oil has fallen 50%. This fall in the price of oil has a significant impact in reducing transport and other business costs. Falling oil prices is good news for oil...
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