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Why is hyperinflation and deflation bad for an economy? (You dont have to go over everything as this could cause you to writ
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Answer #1

Hyperinflation:

Monthly inflation more than 50 % is called hyperinflation. Hyperinflation ruins economy completely. No investor is ready to make investment and people start losing their faith in currency. they start converting currency into other stable medium. Growth rate of economy decimates and investment activities are severely affected.

Deflation:

it is opposite to inflation, deflation means sustained fall in general price level. When price level falls, there is fall in demand. Investor loses their faith in economy sensing that continuous fall in price level will reduce their profits. so investors do not make investments so growth rate is negatively affected.

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