Adam Rikkers, Chapter 10, Question #5

One point that I found to be particularly interesting was about inflation and deflation. I hear about inflation all of the time. People always talk about how the prices of goods are rising, and about how that is bad for the economy. So when I heard about deflation, the opposite of inflation, I thought that it would be the opposite of bad. But I was very wrong. I learned that deflation is much worse than inflation. I thought that falling prices would influence people to buy more goods, and stimulate the economy. Unfortunately the opposite happens. What actually happens is that "asset prices [also fall], so consumers feel poorer and less inclined to spend" (238). All together it was interesting to learn more about deflation, which is something that is talked about less frequently than inflation, and hear about the impact of it.