Concept Introduction:
Deflation: When the average price level decreases continuously for a given interval in an economy then it is referred as deflation. It leads to a recession in an economy. Deflation is not healthy for an economy.
Inflation: When the price of any good increases continuously for an interval of time it is called inflation. It leads to a decrease in the
Hyper-inflation: When the inflation rate is very high and is usually for a longer duration then it is termed as hyper-inflation. It has a very harsh impact on an economy as it leads to depression.
Inflation Tax: It is a tax which is bared by the asset or the income holders due to an increase in the rate of inflation. It is a kind of
The formula to calculate inflation tax is,
Want to see the full answer?
Check out a sample textbook solution- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education