Meaning of Deflation, Disinflation and Stagflation
Deflation: The essential feature of deflation is falling prices,
reduced money supply and unemployment. Though falling prices are desirable at
the time of inflation, such a fall should not lead to the fall in the level of
production and employment. But if prices fall from the level of full employment
both income and employment will be adversely affected.
Disinflation: Disinflation is the slowing down the rate of inflation by
controlling the amount of credit (bank loan, hire purchase) available to
consumers without causing more unemployment. Disinflation may be defined as the
process of reversing inflation without creating unemployment or reducing output
in the economy.
Stagflation: Stagflation is a combination of stagnant economic growth,
high unemployment and high inflation.