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    Is low stable inflation or deflation better for the economy?

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    Is low stable inflation or deflation better for the economy? Explain.

    © BrainMass Inc. brainmass.com October 10, 2019, 5:06 am ad1c9bdddf
    https://brainmass.com/economics/inflation/is-low-stable-inflation-or-deflation-better-for-the-economy-492401

    Solution Preview

    On the surface, as a consumer, we might like the idea of deflation, which means things get cheaper every year. But from nearly every other aspect it is not a good idea. Low stable inflation means that prices increase slowly and at a stable pace. As prices fall, that means manufactured things prices fall even as they have paid for inputs that are relatively higher price (because when the inputs were bought, the price of the finished goods had not fallen yet, relative to the inputs, but by the time the item is made and ...

    Solution Summary

    This solution discusses whether low stable inflation or deflation is better for the economy.

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