2006-12-03 14:20:27 · 6 answers · asked by rmb b 1 in Social Science ➔ Economics
Mike is wrong! I mean, it may make sense, but inflation existed well before WWII. So his theory may only be part of the answer.. but it would be careless to assume that the incurssion of women in the economy is why there is inflation.
The cost of living increases because of inflation, and inflation is caused by the interaction of the supply of money with output and interest rates. There are principally 2 economic points of view that explain how inflation is affected by the economic variables mentioned before (the monetarists and the keynesians), but it would be a very long answer if i tried to explain them.
When people spend money, more money starts to go around the economy. We buy a car, so car dealers have more money to spend in marketing and in more cars, so manufacturers start to produce more cars, which may need more employees. More employees is more people with income to spend. When more people have money to spend, then there is more demand for goods and services, and while the supply goes up, that shify of demand will drive prices up. So how can this trend stop? Imagine intrest rates going up. Higher intrest not only stop companies from borrowing and people from getting credit, it makes us want to save that money to get more money from intrest. So we stop spending for a while and inflation slows down.
Thats the general idea, of course, it just an example of the many things that can happen for inflation to huke up, or for it to slow down (Deflation).
Good luck, hope this helps.
2006-12-03 16:51:49 · answer #1 · answered by Chess 4 · 1⤊ 0⤋
In World War II, women worked making the guns and machinery, etc. and when the war got over, things didn't just go back to the husband working only. More women work and continue to do so even after getting married. This allows for a dual income lifestyle. Because this is becoming the norm, people have more money and prices of things go up. Then the average citizen can't afford to live in the old way of fathers providing for their families. When the income of the middle class goes up, the prices of the things they buy do also.
2006-12-03 14:35:23 · answer #2 · answered by Mike 3 · 1⤊ 2⤋
the increase of the population
2006-12-03 14:22:07 · answer #3 · answered by arsani401 2 · 0⤊ 1⤋
General inflation, mush of which is caused
by rising oil prices.
2006-12-03 14:26:34 · answer #4 · answered by kyle.keyes 6 · 0⤊ 0⤋
the Republicans!!
2006-12-03 14:28:18 · answer #5 · answered by nervousenergy73 5 · 0⤊ 0⤋
liberals.
2006-12-03 14:27:57 · answer #6 · answered by JaysFan3 1 · 0⤊ 0⤋