Define the Terms Inflation and Deflation

question 26

Essay

Define the terms inflation and deflation. Discuss their effects on the economy with the help of real-life examples.

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Definitions:

Stock Dividend

A distribution of additional shares of a company to its shareholders instead of paying dividends in cash.

Stock Split

A corporate action by a company to divide its existing shares into multiple ones to boost the liquidity of the shares, often done when share prices are high.

Paid-In Capital

Total amount of cash and other assets paid into the corporation by stockholders in exchange for capital stock.

Stock Dividend

A company rewards its shareholders with extra shares, foregoing the option to distribute cash.