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Declining down of inflation rate in an economy.
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Disinflation as compared to inflation would normally be good for investments in?
Disinflation as compared to inflation would normally be good for investments in bonds or gold.
Why might disinflation prove to be favorable to financial assets?
Basically you can buy stocks or bonds at a discounted rate when there is disinflation. This is also good for companies because althought the stock is disinfating people are still investing in the company.
How does a government slow inflation?
One way is to decrease the prices of general goods. This will cause disinflation, but not deflation. Another way is to stop printing money.
What effect will disinflation following a highly inflationary period will have on the reported income of the firm?
A great change in ratios will occur as expensive inventory is charged against softening prices.
What has the author Bankim Chadha written?
Bankim Chadha has written: 'Are prices countercyclical' 'Economic restructuring, unemployment, and growth in a transition economy' 'Models of inflation and the costs of disinflation'
What does disinflated mean?
dis·in·fla·tion  disinflation pronunciation" /> /ˌdɪsɪnˈfleɪʃən/ Show Spelled[dis-in-fley-shuhn] noun Economics .a period or process of slowing the rate of inflation.A drop in inflation rate , i.e . a reduction in the rate at which prices rise-(of an economy) to slow down the rate of inflation.verb (used with object)2.to slow down the rate of inflation in (an economy).Definition: Disinflation occurs when the inflation rate is declining over time.Deflation occurs when the inflation rate becomes negative.Terms related to Disinflation:DeflationInflationRecession***-Inflation is one of the most important variables in economics, as its impact is felt on everything from mortgage rates to union-management contract negotiations.The Economics Glossary defines Inflation as: Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.
What has the author Jose De Gregorio written?
Jose De Gregorio has written: 'Inflation, growth, and central banks' -- subject(s): Banks and banking, Central, Central Banks and banking, Economic development, Inflation (Finance) 'Deuda Externa, Escenario Economico Externo y Cuenta Corriente en Chile' 'Productivity growth and disinflation in Chile' -- subject(s): Industrial productivity, Deflation (Finance) 'Principales aspectos de la politica cambriaria en Chile'
What has the author Michael M Hutchison written?
Michael M. Hutchison has written: 'A cure worse than the disease?' -- subject(s): Devaluation of currency, Economic assistance, Economic stabilization, Financial crises, International Monetary Fund 'Are all banking crises alike?' -- subject(s): Financial crises, Banks and banking 'Aggregate demand, uncertainty, and oil prices' -- subject(s): Prices, Petroleum products, Supply and demand 'Central bank institutional design and the output cost of disinflation' -- subject(s): Banks and banking, Central, Central Banks and banking, Deflation (Finance), Econometric models, Inflation (Finance)
What is the difference between recession and deflation?
recession is when you have no growth in the economy for at least 6 months and deflation is when prices in general instead of getting more expensive go down or are less expensive. When you are in a recession depending on the particular recession prices can go up down or stay the more or less the same
What would the government do if the inflation rate is too high?
The government would aim to constrict money supply in the economy and impose deflationary measures. MV = PY Where M=Money supply, V=Velocity of spending, P=Price Level and Y=Quantity of Output. Assuming that V and Y are constant values in the short run, by constricting M, P therefore falls, meaning disinflation would be experienced. This could be achieved by a raising of interest rates (prompting increased saving) or increased tax (reducing average wealth). Although it could be argued that increasing interest rates attracts hot money into an economy, which would raise the exchange rate and increase MPI, which in itself is inflationary, these effects are negligible when compared to the impact that the change in rate has on spending within the domestic economy.
Who would benefit from inflation and who from deflation?
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed. In this way, one pays back less in real terms than one had borrowed. Those who may benefit from higher inflation are people with significant debt. Typically those most hard-hit are white-collar workers, teachers, pensioners, doctors, those on fixed incomes and those working for cash wages. These categories of people tend to have their wealth in savings, retirement funds and are, thus "creditors", whose future income will not be adjusted up as inflation rises. These people's incomes lag behind the speed of inflation making them poorer in irregular fits. Inflation, caused by a complex set of economic variables, is not a singular type of economic problem, however. It is typically compounded and exacerbated by other variables and there isn't a single way to address and stimulate its reduction. For example, it is assumed that in the short run inflation and unemployment are inversely correlated (the higher inflation, the lower unemployment; the higher unemployment, the lower inflation). However, the current economic situation in the US displays both a rise in unemployment and indications of progressively rising inflation expressed in rising commodities prices, reduced value of the dollar and the rise of gold as a safe haven for wealth. The different types of inflation are best discussed elsewhere. Deflation is the opposite of inflation- where there is a sustained general fall of prices of wages, goods and services. This is undesirable because it may lead to bankruptcies and it is usually caused by a sustained fall in aggregate demand. The winners/losers in this scenario reverse roles compared to the inflationary scenario (very simply speaking). Disinflation should not be confused with inflation. Disinflation is a reduction of inflation overtime.
What has the author Laurence M Ball written?
Laurence M. Ball has written: 'Fiscal remedies for Japan's slump' -- subject(s): Economic conditions, Financial crises, Fiscal policy 'Policy rules for open economies' -- subject(s): Econometric models, Foreign exchange rates, Interest rates, Inflation (Finance), Monetary policy 'Wage indexation and time-consistent monetary policy' -- subject(s): Econometric models, Inflation (Finance), Indexation (Finance), Wages 'Relative-price changes as aggregate supply shocks' -- subject(s): Prices, Mathematical models, Phillips curve 'Another look at long-run money demand' -- subject(s): Econometric models, Demand for money, Interest rates 'Credible disinflation with staggered price setting' -- subject(s): Mathematical models, Prices, Inflation (Finance), Government policy 'Has globalization changed inflation?' -- subject(s): Globalization, Inflation (Finance), Econometric models 'The NAIRU in theory and practice' -- subject(s): Econometric models, Inflation (Finance), Unemployment, Business cycles 'Does inflation targeting matter?' -- subject(s): Inflation (Finance), Monetary policy, Anti-inflationary policies 'The dynamics of high inflation' -- subject(s): Inflation (Finance) 'Efficient rules for monetary policy' -- subject(s): Mathematical models, Monetary policy, Econometric models, Inflation (Finance), Interest rates 'Policy rules and external shocks' -- subject(s): Interest rates, Monetary policy, Anti-inflationary policies, Business cycles, Econometric models 'What determines the sacrifice ratio?' -- subject(s): Mathematical models, Inflation (Finance), Rational expectations (Economic theory) 'Short-run money demand' -- subject(s): Demand for money
