Question

How does inflation primarily differ from deflation?

Inflation tracks changing prices but deflation does not.

Inflation relates to rising rather than falling prices.

Inflation happens only when the money supply is too small.

Inflation occurs much less often than deflation does.

Answer 1

[AI-generated answer — Bot GPT 3.5]

Inflation primarily differs from deflation in that inflation is characterized by a general increase in prices and a decrease in the purchasing power of money, while deflation is characterized by a general decrease in prices and an increase in the purchasing power of money. Inflation is typically caused by an increase in demand relative to supply, while deflation is typically caused by a decrease in demand relative to supply. Additionally, inflation can be harmful to an economy if it becomes too high, while deflation can also be harmful if it leads to a decrease in consumer spending and investment.