This document discusses inflation, deflation, and the Phillips curve. It defines inflation as a rise in prices and fall in the value of money caused by an increase in demand or decrease in supply. There are two types of inflation - demand-pull inflation caused by higher consumer demand, and cost-push inflation caused by increased costs of wages, raw materials, or money supply. The impacts of inflation are that it erodes purchasing power for consumers and benefits farmers and businessmen in the short-run but hurts them in the long-run. Deflation is when prices fall significantly over time, making money more valuable. The Phillips curve shows an inverse relationship between unemployment and nominal wage inflation, such that lower unemployment is associated with higher wages and