Is Deflation Good Or Bad? 1 When the index in one period is lower than in the previous period, the general level of prices has declined, indicating that the economy is experiencing deflation. This general decrease in prices is a good thing because it gives consumers greater purchasing power. Why is deflation bad? Typically, deflation
What Is Deflation And Its Causes? Deflation can be caused by a combination of different factors, including having a shortage of money in circulation, which increases the value of that money and, in turn, reduces prices; having more goods produced than there is demand for, which means businesses must decrease their prices to get people
How Does A Shortage Affect Demand Curve? A Market Shortage occurs when there is excess demand– that is quantity demanded is greater than quantity supplied. In this situation, consumers won’t be able to buy as much of a good as they would like. … The increase in price will be too much for some consumers
What Effect Does Price Have On Production? What effect does price have on production? If the price of a resource used to produce the product increases, this will increase the costs of production and the producer will no longer be willing to offer the same quantity at the same price. They will want a higher
What Effect Does A Rise In The Cost Of Machinery Or Raw Materials Have On The Supply Curve? What effect does a rise in the cost of machinery or raw materials have on the supply curve? What effect does a rise in the cost of machinery or raw materials have on the cost of a