Deflation is said to be a state
where the inflation rate fall below zero. One thing which needs to be
understood before going in the details and discussing the relationship and
impact of deflation with different variables we must be specific towards our
basic and the core concept. The core concept differentiates deflation from the
term which seems similar but different in the process where as deflation is a
to the point and specific situation, a scenario which is ultimate and static. However
instead of deviating from the main theme of our talk we focus on the specific
point which we will discuss later.
The new and different thing about
the topic is that while in Pakistan and many other underdeveloped or developing
countries are facing the problem of inflation what is the reason of discussing
deflation. The answer to this question
is that while the economies of the developing countries are suffering from
inflation some economies of some developed countries are suffering from
deflation a major example is Japan. To add insult to injury the currency prices
also impact in the happening of such situation.
This situation prompts a question
in the minds that economy can be prosperous neither in the presence of
inflation nor deflation so what will be the suitable situation which could be
helpful for an economy to grow.
