In this article, we’ll go over the differences between the four terms, what they all mean, how significant they are and what circumstances they need to occur. Before we go into depth about them all, they all mean very similar things, all about the movement of a price of something, some are used to refer to changes of a price of a good, and others are used to refer to the overall changes of price throughout the economy.

One thing to note, the general term inflation means change in price, not which direction it changes in, but typically it refers to the positive inflation where prices go up

1 What is Inflation (Aka Positive inflation)?

Inflation (Positive inflation) is just the rise in prices of a good through a set period of time, these could be for just a singular product: for example: the price of a pen has increased from $1.00 to $1.20 over the past year, Or it could be for an entire economy: For example: the inflation of the economy went from 1.56% to 1.76% in the last quarter (4 months) So is inflation completely bad?, For example: Inflation is good: House prices climb, House owners will see their assets increase which means they get a greater wealth Inflation is bad: House prices climb, House buyers will struggle as prices are super high

the way you measure inflation for and entire economy is through measuring the prices of a big basket of goods that common households would buy over a set period of time, usually monthly, this is called the Consumer price index (CPI),

2: What is DisInflation (aka Negative inflation)?

Disinflation (aka Negative inflation) is the term used to refer to when prices fall, these could be for just a singular product: For example: the price of a pen has decreased from $1.00 to $0.90 over the past year, Or for an entire economy: For example: The deflation of the economy went from 1.56% to 1.26% in the last quarter is it a good thing? For example: Disinflation is good: Prices of CPI items fall ==> Increase in purchasing power, Increase in standards of living, Increase in Currency power, ETC Disinflation is bad: House prices go down ==> home owners will see falls in their assets meaning that their overall wealth goes down

Overall disinflation is seen as a good thing compared to inflation or deflation and most obviously hyperinflation

3: What is Deflation?

Deflation indeed does sound like Disinflation, but you shouldn’t confuse them, Deflation isn’t used to refer to the price fluctuations for goods, it’s only used for looking at the behaviour of the economy, Deflation is used to refer to when the Inflation rate falls below 0, it is not good at all since prices are shrinking which means that consumers aren’t buying because they expect prices to fall further, the impact it has is that redundancies and low wages will occur for businesses to maintain profits,

It’s bad, in part, because it can lead consumers to spend less now, in part because they expect prices to continue to fall; it can push businesses to lower wages or lay off employees to maintain profit levels; and it makes existing debt more expensive for many borrowers. Deflation: Causes and effects | Empower

4: What is Hyperinflation?

This is the worst of the worst scenarios to be in for any economy, Again like Deflation, it is only used to refer the changes of inflation in an economy, Hyperinflation is where the positive inflation rate goes up by hundreds This means the prices have skyrocketed and standards of living are bad along with a super weak currency, this makes money ‘worthless’, although there are many negative consequences, there are still some winners, EG: mortgage owners/borrowers can pay back faster with worthless money

In economics, hyperinflation is used to describe situations where the prices of all goods and services rise uncontrollably over a defined time period. In other words, hyperinflation is extremely rapid inflation. Generally, inflation is termed hyperinflation when the rate of inflation grows at more than 50% a month. Hyperinflation — Definition, Causes and Effects, Example (corporatefinanceinstitute.com)

The End

And now I mark the end of my 3rd article :), I thank anyone who read it and i hope it has helped you, any suggestions then please comment, I’m glad I’ve Started writing again, please feel free to checkout my website and other writing sites Site of GDS3 (gdsimpson3.carrd.co), I hope to write more in the future, until then, Fēicháng gǎnxiè nǐ, wǒ de péngyǒu Thank you my friend