Deflation is necessarily better for the economy than inflation as inflation devalues money and reduces the purchasing power of consumers.

Question

Quizplus · Accepted Answer

Deflation, while increasing the value of money, can lead to decreased spending and investment as consumers and businesses anticipate lower prices in the future, potentially leading to a slowdown in economic activity. Inflation, in moderate levels, is often seen as a sign of a growing economy, encouraging spending and investment.

Deflation Is Necessarily Better for the Economy Than Inflation as Inflation