• Ratio Analysis
  • Ratio analysis - Types
  • Real Deficit
  • Reflation
  • Reflation

    DEFINITION OF 'Reflation'

    Small rise in the general price level when economy still faces the underutilization of resources 

    Explanation

     When economy is in depression, output and employment are less than the socially desirable level. Output and employment can be increased by increasing demand in an economy. When demand increases, the output and employment opportunities also increase. With increase in the output and employment, the general price level increases as well. This is called Reflation. This is deliberate step which is taken by the government to put an economy out of recession or depression.

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