MODULE 33

Types of Inflation, Disinflation, and Deflation

In this Module, you will learn to:

• Use the classical model of the price level

• Explain why efforts to collect an inflation tax by printing money can lead to high rates of inflation and even hyperinflation

• Define the types of inflation: cost-push and demand-pull

We have seen that monetary policy affects economic welfare in the short-run. Let’s take a closer look at two phenomena that involve monetary policy: inflation and deflation.