How is inflation caused and how can it be stopped?

Answer 1

Inflation is caused by the increase in the cost of goods and services. Inflation that is caused artificially, like the price of crude oil, can only be stopped by taking away the oligopolistic profits the sellers make. Inflation caused by true scarcity cannot be cured.

So far, this (USA) country's only answer to inflation has been to increase the cost of borrowing money, which seems crazy, since that makes prices go up also. I guess you have to have a degree in economics to understand why stupidity works.

Answer 2

Inflation occurs when the Federal Government increases the money supply to quickly (1st) and other factors like rising oil \ gasoline costs contribute to steady increases in product costs. That in turns put pressure on employers to pay more which increase product costs further. This cycle causes inflation - which reached a peak in the 1979/80 era and has not be repeated since - mostly becuase the Fed has kept the money supply in check.

Answer 3

The simple answer is that inflation is caused by the printing of money - the more money in the system, the less the value of each unit of currency.. of course, there are short term determinants such as oil prices which effect near everything that you buy because it has to be shipped in etc..

Answer 4

If there is too many people with too much money prices go up, as prices go up then people need to get paid more to buy things, if pay goes up and prices go up this means money is worth less (per unit) than what it used to be worth, this is what I think is called inflation. Inflation doesn`t need to be stopped as long as it is within certain limits it is OK for it to continue.

Answer 5

It's a cyclical dynamic of all economies and can't be stopped except by implementing a command economy thereby wrecking the advantages of market economics. The money supply theory is a red herring.

Answer 6

some level of inflation is good - it's a side product of growth and prosperity you don't want it stopped

inflation can get out hand for any number of reasons too numerous to mention