The conversation between human and AI assistant.
Why does inflation depreciate the currency while deflation appreciates the currency?
And what about deflation?
Deflation can lead to increased unemployment as businesses struggle to maintain profitability. It can also lead to a decrease in economic growth as people postpone consumption in anticipation of future price drops. Furthermore, deflation can cause an increase in the real burden of debt as the value of money increases, making it more difficult for borrowers to repay outstanding loans.