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> The most common form of inflation is due to an increasing money supply Not really. The money supply only affects inflation in that it increases demand for so
by erispoe 4y ago
> The most common form of inflation is due to an increasing money supply
Not really. The money supply only affects inflation in that it increases demand for some things quicker than supply can meet demand. In that regard, untargeted stimulus money did that. Let's not forget though that there is also significant supply disruptions with covid, the war in Ukraine... There's also strong supply-side factors to the inflation we're experiencing.
- D13Fd 4y ago> The money supply only affects inflation in that it increases demand for some things quicker than supply can meet demand. My Econ 101 understanding is that if there is more money available to buyers but the amount of goods available stays the same, and if the goods have elastic prices, the prices will go up.
- wbsss4412 4y agoEcon 101 states that all prices are set by supply and demand. Money doesn’t even get introduced until later.
- meatbundragon 4y agoDepends on where you took Econ 101, I guess. When I took Econ 101, it did cover monetary policy and inflation. I believe it was covered in AP Macroeconomics/Microeconomics in high school as well.
- wbsss4412 4y agoTo be transparent, I took Econ 101 over a decade ago and don’t remember. A better way to have phrased my post is that economics fundamentally understands price levels as being driven by supply and demand, and everything else influences prices though effects on supply and demand.