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Inflation: Why Not Just Print More Money?

Printing more money would lead to inflation because if more money is available, people will spend more, forcing retailers to raise prices or run out of products. Producers would then need to raise prices as well or face shortages, as they do not have the capacity or labor to significantly increase production. Inflation occurs when there is more money available but the supply of goods does not increase to match it, or demand for goods rises.

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Gaurav Khemka
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52 views5 pages

Inflation: Why Not Just Print More Money?

Printing more money would lead to inflation because if more money is available, people will spend more, forcing retailers to raise prices or run out of products. Producers would then need to raise prices as well or face shortages, as they do not have the capacity or labor to significantly increase production. Inflation occurs when there is more money available but the supply of goods does not increase to match it, or demand for goods rises.

Uploaded by

Gaurav Khemka
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Inflation

Why Not Just Print More


Money?
.
 In short prices will go up after a
drastic increase in the money
supply because:

 If people have more money, they’ll


divert some of that money to
spending.
 Retailers will be forced to raise prices,
or run out of product.
.
 Retailers who run out of product will
try to replenish(reloaded or refill) it.

 Producers face the same dilemma of


retailers that they will either have to
raise prices,
.
 or face shortages because they do not
have the capacity to create extra
product
 and they cannot find labor at rates
which are low enough to justify the
extra production.
.
 we've seen that inflation is caused
by a combination of four factors.
Those factors are:
 The supply of money goes up.
 The supply of goods goes down.
 Demand for money goes down.
 Demand for goods goes up.

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