PROJECT ON THE TOPIC:

INFLATION AND DEFLATION

Author: Nasledova Mariya,Filippova Kristina,Yalovaya VladaSpeciality: Accountant - 31

Content  The essence of inflation The notion of deflation Causes of inflation Causes of deflation Types of Inflation Plans of deflation The result of inflation Count of deflation Conclusion

Inflation - increase in the prices of goods and services. Inflation

should be distinguished from the surge, as a

long-term, sustainable process. Inflation does not mean the growth of prices in the economy, because the prices of individual goods and

services may increase, decrease or remain

unchanged.

The essence of inflation

Deflation - the purchasing power of the local currency,

which is manifested in the reduction of the

price index. Deflation - a process opposite of

inflation.

The notion of deflation

1. Growth of public expenditures;

2. Excessive expansion of the money supply;

3. The reduction of the real volume of national production;

4. The depreciation of the national currency;

5. An increase in government taxes and duties, excise duties.

Causes of inflation

1. Increasing the value of money.

2. Reducing the cost of many goods

3. Reduction of the central bank or the government wraps on the market in the money supply

4. Drop in the velocity of money

5. Refusal of the population to spend their money in anticipation of further growth of their value

Causes of deflation

1. Demand inflation

2. Inflation suggestions

3. Balanced inflation

4. Unbalanced inflation

5. Projected inflation

6. Unpredictable inflation

7. Adapted consumer expectations

Types of Inflation

1. Deflation growth;

2. Deflation caused by the buildup of cash balances;

3. Deflation of bank credit;

4. Confiscatory deflation.

Plans of deflation

1. Impaired people's savings

2. The impact on the national economy

3. Breakdown of the monetary system

4. The crisis of public finances

5. Naturalization of exchange

6. Aggravation of social conflicts

The result of inflation

Deflation leads to economic recession, increasing business failures and increased unemployment. This is due to the fact that the number of items

exceeds the market demand.

Count of deflation

ConclusionOne of the basic principles of economics are balanced. Prices

should develop naturally, they do not have any sharp increase (inflation) nor decrease sharply (deflation).

Violation of this principle leads to recession and unemployment. To normalize the situation, the government has taken a lot of action, but from us is also something that depends. We must be careful not to fall into a liquidity trap

and refuse to use our money, waiting for further price reductions.