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What are the consequences of sustained deflation?
At first what does deflation mean? Deflation- is the general decline in prices, the opposite of inflation.
The consequences of sustained deflation may be: falling company’s profits, therefore closing factories, it causes rising unemployment, income goes down.
How does deflation affect wealth?
During deflation, when prices are falling rapidly and costs of production are remaining the same, producers incurs heavy losses, this causes income to fall. so wealth is contracting too.
How does deflation affect debt?
By the consequence of low prices, debtor’s defaults are increasing. So it’s harder to earn money with high costs and low prices, and therefore hart to give loans back
At first what does deflation mean? Deflation- is the general decline in prices, the opposite of inflation.
The consequences of sustained deflation may be: falling company’s profits, therefore closing factories, it causes rising unemployment, income goes down.
How does deflation affect wealth?
During deflation, when prices are falling rapidly and costs of production are remaining the same, producers incurs heavy losses, this causes income to fall. so wealth is contracting too.
How does deflation affect debt?
By the consequence of low prices, debtor’s defaults are increasing. So it’s harder to earn money with high costs and low prices, and therefore hart to give loans back
2 comments:
After 32 days of silence...at last.
your Math is preety good! (:
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