Re: Inflation confuses me.
Be sure not to confuse inflation with supply and demand. The fact that electronics become cheaper and healthcare becomes more expensive has to do with supply and demand. Generally speaking, when the supply of money in the economy is higher than it needs to be, the demand for all goods increases, which allows companies to increase prices, which results in inflation. (Note this is not always true as in the case of "inferior" goods and services such as Ramen noodles. When people get more money they demand things like steak and lobster and use less Ramen noodles. The same thing goes for driving the car or taking a flight versus riding on the bus.) Electronics prices typically go down because the supply goes up over time.
Deflation is bad because when demand drops, companies have to lower prices. Then consumers anticipate that prices will go lower in the future, so they stop buying. When they stop buying, companies have to lower prices. Also during this time, typically people get laid off further reducing their incentive to buy. The cycle continues until something gets the economy moving again.
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