Understanding Inflation and Deflation: Impact on Businesses and Consumers

The video explores inflation, its causes, and impacts on businesses and consumers. It discusses how inflation is measured using the Consumer Prices Index (CPI) and the effects of inflation on real wages and business operations. The video also covers the potential benefits of inflation for firms with high debt and the challenges posed by deflation, using Japan as a case study.

What is the relationship between inflation and real wages?

What are some positive impacts of inflation for highly indebted firms?

What challenges do firms face during periods of deflation?

How can deflation impact consumer expectations and business pricing strategies?