What is the relationship between GDP and Inflation?

Question

Does Inflation rise with growth in GDP? Why?

Answer 1

There is no relationship with GDP and Inflation this is a Economic Myth. Inflation is caused when the money supply is not constant.

Answer 2

Increasing GDP is also an increase in national Income, when people have more in their hands, prices will go up due to higher aggregated demand. Look at Hume's Equation M = k P . Y prices go up as there is more money in the economy, When inflation increases exogenously, GDP will also increase other things equal, as firms get a better price for their products and services and hence a better profit making overall in the country ensures growth at the cost of inflation, also leading to lower unemployment if government supports the cause with an ease in the fiscal policy.

Answer 3

when GDP rises, people have more money to spend. this causes a rise in demand = price rise/inflation
if GDP growth is NOT followed with growth in supply of goods, then the prices will also rise

Answer 4

no, as long as the supply of goods keeps up with the increased demand that is stimulated by GDP growth, and money supply remains constant.

Answer 5

The GOP causes inflation with their supply side model.

Answer 6

positve relationship GDP goes up inflation goes up and vise versa

Answer 7

They are first cousins.

Yes.

Because.