Inflation and Deflation


How does inflation and deflation really work?

It seems that more people misuse the dual terms, inflation and deflation, than any others in economics. First, people have conflicting definitions of the terms. Second, they don't seem to grasp the counter-intuitive effects of inflation and deflation, regardless of the definition used.

In this presentation I will clear up some of that confusion.

This explanation of inflation and deflation goes against the grain of popular misconception; therefore, in order to make this presentation sufficiently clear I have included a large number of examples. Please have patience while studying these examples, and I hope they help make the concepts discussed more understandable.

I would appreciate any comments that will help me improve this presentation. Send comments to the e-mail link on the lower left hand corner of each page.