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Inflation and deflation has many characteristics, certain characteristics determine different types of inflation or deflation. The different types of inflation or deflation include...
· Inflationary/deflationary expectations
The different categories for inflation and deflation reflect the circumstances that create the inflation or deflation, reflect the characteristics that make that type of inflation or deflation different from another and also reflect the way in which the inflation or deflation needs to be managed and finally the way in which it will be corrected if need be.
Economists study patterns and trends within the economy – inflation and deflation is not exempt from such a study. Trends are common within inflation and deflation; the best example of such is the way inflation and deflation is linked with the business cycle. Generally, when the business cycle is in an expansionary phase, this is when inflation occurs and when the business cycle is in a contractionary phase, this is when deflation occurs.
However due to the surfacing of a time lag known as stagflation, the reaction time can be significantly after the event which causes phases to overlap.
Trends in inflation and deflation are invaluable to economists and participants in the economy because economics is a science – economists take equations, formulas, theories, patterns and trends and use these to predict the future. A trend or a pattern can provide the means for an economist to predict what is to happen in the future and even perhaps put measures in place to either counteract the situation, correct the situation or simply study the situation.
Inflation and deflation has many different causes and for many different reasons. These different causes and reasons allow for many different types of inflation or deflation. Types of inflation and deflation include...
· Inflationary/deflationary expectations
Demand-pull inflation or deflation ...