- Inflation is a measure of how prices have increased.
- Disinflation occurs when the inflation of prices slows down gradually in the short run. This occurred between the years 2008 and 2009.
- The inflation rate was about 1.5% in 2014 in the United States.
- Overall, inflation declined only in 2009.
Inflation, Disinflation, and Deflation are all related. They explain the behavior of prices under certain economic circumstances.
When prices of commodities or the cost of living begin to go down, deflation is said to occur.
Governments monitor inflation rates because when it becomes too high, the spending or purchasing power of its currency is weakened.
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