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An inflationary development is characterized by rising prices within a certain
period of time.
The rising prices is a consequence of an uneven development in the quantity
of goods on offer and the quantity of money available, which is self determines the demand and is the inflation rate.
The causes of inflation are generally complex and can arise either from the
goods or from the monetary side.
The consequences of inflation are extremely damaging for the economy. In-
flation becomes stagflation when economic growth decreases or comes to a halt,
but inflation continues to rise.
If the state does not take measures to combat stagflation, this leads to defla-
tion.
Deflation, the opposite development to inflation, represents a reduction in the
supply of money in comparison with the supply of goods.