What is it? Why do we have it and why does it exist (i.e. why don't prices just stay the same?)?
2007-03-09 01:31:17 · 7 answers · asked by Monkey's Forehead 2 in Social Science ➔ Economics
Inflation:
Employment is directly proportional to money supply.
If productivity i.e. out put per person is reduced, cost of article is increased.
Population increases; so more employment is required so money supply is enhanced that is called inflation.
2007-03-09 01:39:40 · answer #1 · answered by deepak57 7 · 0⤊ 2⤋
Inflation is what pay increases bring for the poor, all of these answers you have already are somewhat correct. Inflation is not the right thing or right way of fixing the economy, the poor and the wealthy need to be equalled out more and I am not sure how to do this exactly, but we now have 900 and something billionairres so no wonder we have these kinds of problems the poor man that gets between 10 and 20 thousand a year has no chance no matter what unless they win a lottery or find some patent that sells, the poor man is not going to be able to keep surviving under this system. I think if those in power don't recognize this soon and do something about it they might have wished they had. Remember there have been several great areas before this, what happened to them?
2007-03-09 10:08:41 · answer #2 · answered by Friend 6 · 0⤊ 1⤋
inflation is a general and sustained rise in prices. according to classical economists, it is caused when an increase in spending (demand) is not matched by an equal increase in productivity.
put simply, if we all get a 5% pay rise, but do not increase our productivity by 5%, then there will be 5% inflation, as 5% more money is being used to buy the same amount of goods.
2007-03-09 10:26:57 · answer #3 · answered by mr. me 3 · 3⤊ 0⤋
Inflation of balloons is necessary to stop them looking wrinkly. The prices of them go up every time the rubber trees go on strike.
2007-03-10 04:01:49 · answer #4 · answered by Dingbat O'Giddy 2 · 3⤊ 0⤋
the basic rule of economics is supply and demand. if demand is high then prices rise, when people get pay rises then they have more income at their disposal and therefore they demand more goods and services, so the price goes up; when the price goes up then everyone demands a pay rise to pay for these goods; when they get it then they demand more goods and services...so the price goes up
2007-03-09 09:43:06 · answer #5 · answered by Jason O 3 · 0⤊ 0⤋
the man who makes $6-$8 an hour pays the same for something as the rich man. when you get a raise,the cost of things go up,so you are still at the same level.
2007-03-09 09:45:23 · answer #6 · answered by Tired Old Man 7 · 1⤊ 1⤋
necessary for economic growth
2007-03-09 09:55:31 · answer #7 · answered by Anonymous · 0⤊ 1⤋