3 ms·
Mathematically if the supply of money stays fixed there cannot be general inflation. Some prices could go up but the overall level of spending must be constant
by zeroonetwothree 4y ago
Mathematically if the supply of money stays fixed there cannot be general inflation. Some prices could go up but the overall level of spending must be constant (so buyers would substitute or else other prices would decrease).
- Xixi 4y agoMathematically if the supply of goods and services go down, but the supply of money stays fixed, prices will go up. I would expect that reducing the supply of oil (and to a lesser extent natural gas) would cause that sort of things, by reducing the ability to transport goods, to manufacture all kind of things, and even to grow food (besides tractors running on oil, most fertilizers are made from natural gas).