Causes & Effects of Inflation/Deflation - SS2 Economics Past Questions and Answers - page 1

(Inflation decreases the value of money, meaning that the same amount of money can buy fewer goods and services)

(When the demand for goods and services decreases, prices tend to decrease. This is because a decrease in demand will lead producers to lower prices with the hope of attracting consumers to purchase their goods and services)

(It decreases the purchasing power of money. This means that the amount of money formerly needed to purchase a good or service has increased. Thus, the consumer will purchase less of that good and service)

Expansionary monetary policy can cause inflation.

Deflation can increase the burden of debt because the value of money increases, making it harder for debtors to repay loans.