do provide at least 4 arguments
2007-01-30 15:57:02 · 4 answers · asked by Anonymous in Social Science ➔ Economics
An increase in the money supply IS inflation. It is as simple as that. When we had a gold-backed dollar, there was no inflation.
Now, our "dollar" is paper. It is redeemable in nothing. When government spends more than it receives in taxes, it monetizes the debt. As more currency is printed, the first user of this new currency is government. The new currency dilutes the value of the rest of the currency in circulation. It is supply and demand. More "dollars" without more things to spend them on. The result is higher prices and higher wages.
Merchants would raise their prices every day, if they could. They are unable to. When more dollars are introduced into the economy, it bids the prices up for products and services.
Rising prices and wages are the result of inflation. An increase in the amount of currency in circulation IS inflation.
2007-01-30 16:04:25 · answer #1 · answered by iraqisax 6 · 1⤊ 0⤋
Increase in money supply without support from inputs of economy,is not sustainable.Whole system will collapse.So supports from agriculture/industries/service sector is must.It will lead to enhanced purchasing power of peoples working in the respective sector
2007-01-30 17:20:54 · answer #2 · answered by balkrishna c 4 · 0⤊ 0⤋
Logic
History
Economics
Common Sense
2007-01-30 16:04:49 · answer #3 · answered by Anonymous · 0⤊ 1⤋
when their is too much supply of money in the market,then all the prices inc. of the commodities, & the normal man is affected by that.
2007-01-30 21:35:47 · answer #4 · answered by Anonymous · 0⤊ 0⤋