Ask Experts Questions for FREE Help !
Ask
    rock-onn's Avatar
    rock-onn Posts: 5, Reputation: 1
    New Member
     
    #1

    Apr 8, 2017, 06:41 AM
    Causes of inflation
    The causes of inflation are cost-push, demand-pull and monetary expansion.

    I read a few webpages on inflation. I understood the concept of cost-push, demand-pull. But I don't understand how does increase in money supply result in inflation.
    smoothy's Avatar
    smoothy Posts: 25,495, Reputation: 2853
    Uber Member
     
    #2

    Apr 8, 2017, 07:35 AM
    If you have one of something to sell and ten people want it... what happens? And why? Assume none of the 10 people are family or friends. Now assume the cost to make that one thing goes up for you to create it, what happens and why?
    rock-onn's Avatar
    rock-onn Posts: 5, Reputation: 1
    New Member
     
    #3

    Apr 8, 2017, 09:03 AM
    If ten people want the same thing, the highest bidder would get it and hence price increases.
    If cost of making increases then price would increase to keep same profit margin.

    But I don't understand relation of monetary expansion to inflation.
    Cat1864's Avatar
    Cat1864 Posts: 8,007, Reputation: 3687
    Marriage Expert
     
    #4

    Apr 8, 2017, 09:28 AM
    Those ten people have limited resources. If each of them has ten dollars, then the most any one of them can pay is $10. Say someone from outside the group gives them additional funds. What happens to the price of the product? Is the product worth more? Did anything change in its production?
    ma0641's Avatar
    ma0641 Posts: 15,681, Reputation: 1012
    Uber Member
     
    #5

    Apr 8, 2017, 05:32 PM
    But I don't understand relation of monetary expansion to inflation.


    Look at what happened in "Living Wage" cities. People all of a sudden had more money to spend. Great. Now look what happened to housing prices and rents. In Washington and Oregon, they went up dramatically. Oh Yes, so did income taxes!
    Here is an NC study

    Living wage standard increased, organization points to rising housing costs - Carolina Public Press

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Nominal value - inflation [ 2 Answers ]

Bernie and Hilary have just married and currently live in a rent-free community in exchange for doing community chores and house repairs. They now plan to buy their own home and start a family. They aim to buy a two-bedroom flat in their local area. They have found out that flats such as these are...

Inflation [ 0 Answers ]

Hello, I rent an apartment in a country known for its high inflation rates (one of the BRICs), but I live in Switzerland. Does this mean when I exchange Reais to Swiss Francs (in a +- constant exchange rate) I will avoid the effects of inflation? (as I consume in Switzerland, not Brazil)

Inflation [ 3 Answers ]

Who loses from inflation? Who wins from inflation?

Inflation [ 1 Answers ]

Who loses from inflation? Who wins from inflation?

What will be done if inflation rises? [ 1 Answers ]

Can anyone tell me about this?


View more questions Search