“Inflation Cause and Effect”
“But back to the question of the cause of inflation. Basically when the government increases the money supply faster than the quantity of goods increases we have inflation. Interestingly as the supply of goods increase the money supply has to increase or else prices actually go down.
Many people mistakenly believe that prices rise because businesses are “greedy”. This is not the case in a free enterprise system. Because of competition the businesses that succeed are those that provide the highest quality goods for the lowest price. So a business can’t just arbitrarily raise its prices anytime it wants to. If it does, before long all of its customers will be buying from someone else.” Read more.
“Inflation Cause and Effect”
Tim McMahon
InflationData.com, July 16, 2008.
Image by Francesco Marino / FreeDigitalPhotos.net.
