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If we observe the prices of goods or  services, no price is fixed or constant over time, and even tends to rise. it is caused by an imbalance between the flow of money and goods flow. where the flow of goods should flow from the production company to the market and meet with the flow of goods coming from government and household expenditures or consumers.
To be more precise, the definition of inflation is "a process or event in the economy in the causes for the disruption of the balance between the flow of money and goods flow. "
Deflation is defined as an increase in the demand for money based on the amount of money that is in the community. Deflation occurs when the amount of money circulating in the community (money supply) is less than the amount of supply of goods available. Resulting in decreased prices. Examples of why this could happen can we meet in everyday life, the price of electronic goods are getting cheaper. This occurs because of the rapid technological development so that the supply of goods on the market more and more technology. While the amount of money circulating in the community a little bit, so that goods are falling technology costs. Or deflation can occur when the demand for goods of society has declined and demand money (money demand) from the public increased.
The decline in money supply, deflation can cause a decrease in the supply of money in the community and will lead to major depression (such as that experienced first America) and also will make the investment market will experience turmoil.
2. Slowing economic activity, due to the price of goods has decreased, the consumer has the ability to delay their spending longer in the hope prices will fall further. As a result, economic activity will slow down and give effect to the deflationary spiral (deflationary spiral).
3. The impact of the slowdown of economic activity aftershocks are many workers who ultimately were laid off because business owners can not afford to pay the salaries of its employees. Thus the income received by the community becomes less and the amount of money circulating in the community on the wane.
4. Investments, deflation also resulted in slowdown of investment in the real sector as well as on the trading floor. As a result, this will increase the weight of the economic downturn because there is no longer running business activity.
5. Deflation can also cause interest rates to zero percent in a country. Then followed by the decline in interest rates on bank loans. This indeed is a palliative measure to prevent people save their money in banks that can make money in circulation is getting smaller.
6. Deflation will make people save money so that the money is really appreciated political and social security. People will be a lot of direct investment and the availability of goods is assured. As a result, the value of the currency will strengthen.
7. Deflation will make falling property values. People prefer to deposit their money in banks or capital markets rather than buy property that does not go up. Because prices continue to fall, the producers tend to be less interested in producing goods. Reduced employment opportunities since many layoffs. Taxes can not be withdrawn by the government so that the country pendapata reduced. Overall economic activity in decline.