Agricultural Extension Service, South Dakota State College
Inflation and deflation are words of many different meanings. They refer to the changes in general price levels. Inflation refers generally to a situation where most prices are rising. On the other hand, deflation refers to a situation in which most prices are falling. In between these two extremes is an "ideal" situation called "stability." In our form of economy fluctuations in general price levels are normal. Inflation may be more carefully defined as a situation where the number of dollars spent increases faster than the goods and services produced. In this case, prices will rise. The opposite situation, deflation, is· defined as a situation where the amount of goods and services produced increases faster than the number of dollars spent for them. In this case, prices will fall. The in-between situation, called stability may .be defined as a situation where the dollars spent equal the goods and services produced. This is a condition of more or less stable prices.
Bender, Lyle M., "Inflation and Deflation" (1952). SDSU Extension Circulars. 560.