Inflation or deflation?
02/04/2014 | Estefania Alcocer Marquina (Alumna UC)
What is inflation?
Inflation in Spain
Inflation can be provoked by various factors, but the main ones are: demand inflation and cost inflation. Demand inflation happens when demand for a good increases faster than the supply and the productive sector can´t adapt itself quickly enough. Cost inflation is when the production costs increase, for example: when the raw materials price increases and the companies increase the prices of their goods.
In conclusion, I think that the inflation should increase a little every year because if it increases a lot every year, it will cause serious economic problems. If there is deflation, the economic problems will get worse because the prices of goods and services will decrease and people will wait longer to buy goods (their demand is affected by their expectations). For this reason, companies won´t earn money and will tend to decrease salaries so they don´t go bankrupt, thereby creating unemployment.
Nota: Este artículo ha sido elaborado por Estefania Alcocer Marquina, alumna de la Universidad de Cantabria, como una de las actividades enmarcadas dentro del programa de capacitación lingüística, dando su permiso para la publicación del mismo en FxM Noticias/OIE24 News.