Section 9
Considering Inflation's Distortionary Effects
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![Thumbnail](../../../../../../figures.boundless-cdn.com/14535/raw/storical-inflation-ancient.jpg)
Deflation
Deflation is a decrease in the general price level of goods and services and occurs when the inflation rate falls below 0%.
![Thumbnail](../../../../../../figures.boundless-cdn.com/14218/square/800px-disinflation-graph.jpg)
Disinflation
Disinflation is a decrease in the inflation rate; a slowdown in the rate of increase of the general price level of goods, services.
![Thumbnail](../../../../../../figures.boundless-cdn.com/14474/square/german-hyperinflation.jpeg)
Impact of Inflation on Financial Statement Analysis
General price level changes creates distortions in financial statements. Inflation accounting is used in countries with high inflation.