The Free Market Center

The Free Market Center

Inflation—Deflation
S

Deflation - Wheat Production Decreases

(Decreasing Money Supply)

Wheat Production Decreases

Shoe Production Fixed 0.00%/Month
Wheat Production Decreases -1.50%/Month
Money Supply Decreases -0.50%/Month

Now, wheat production declines.

Inflation-Deflation
Again, the decrease in money offsets the influence of the decline in wheat production. It also pushes down the dollar price of shoes.

Direct Exchange

Inflation-Deflation
Again, direct exchange prices react to the decline in wheat production.
Now, let's summarize the effect of deflation (decreasing quantity of money).

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& James B. Berger. All rights reserved.
To contact Jim Berger, e-mail:

© 2010—2020 The Free Market Center & James B. Berger. All rights reserved.
To contact Jim Berger, e-mail: