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> ...caused by actual supply constraints Just curious, how would supply constraints lead to inflation? I'd expect lower supply would cause deflation
by ranger207 4y ago
> ...caused by actual supply constraints
Just curious, how would supply constraints lead to inflation? I'd expect lower supply would cause deflation
- acover 4y agoInflation refers to dollars buying less hamburgers. When there's a supply constraint - not enough hamburgers to go around - the price of hamburgers goes up and as such there is inflation.
- ranger207 4y agoAh, I misunderstood the parent comment to be referring to _money_ supply. Whoops!
- wbsss4412 4y agoPrices are set by supply and demand. Inflation refers to the price of goods increasing. If supply reduces and/or demand increases, all else equal, prices increase. If supply increases and/or demand decreases, all else equal, prices decrease.