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2007-05-13 12:12:18 · 2 answers · asked by Barrett E 2 in Education & Reference Homework Help

2 answers

One of things that causes inflation is an increase in the money supply. When the money supply increases, overall wages increase. When wages increase, people have more money to spend. This extra spending causes increased demand for products and services. With this increased demand, prices go up.

Inflation results when prices increase.
.

2007-05-13 12:19:20 · answer #1 · answered by Robert L 7 · 0 0

Too much money supply in the people's hands. Since people have more money, they can afford to spend more. So businesses just jack up the prices, which is inflation. Got it. Good.

2007-05-13 12:19:51 · answer #2 · answered by BeautifulGirl 2 · 0 1

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