Money Supply


## Notes

- Inflation is the rise of the general prices of an economy in a period caused by [money supply](/zettelkasten/money-supply) growth.
  - Note that the general prices may increase, but the cause may not be by [money supply](/zettelkasten/money-supply) growth, but for supply and demand changes, for example.
- If the inflation is positive, the general prices increases and each unit of the currency buy a few products and services.
- The opposite of inflation is deflation.
  - The general prices of products and services decrease.
- Long period of sustained inflation is correlated with [money supply](/zettelkasten/money-supply) growing rate higher than the economic growth rate.

## Questions

- What is better: high or low inflation?

- What are the second-order effects of high inflation? And a deflation?

- Why inflation increases when the [money supply](/zettelkasten/money-supply) growing rate is higher than the economic growth rate?

## References

- [Wikipedia. Inflation](https://en.wikipedia.org/wiki/Inflation)

## Backlinks
- [Money Supply](/zettelkasten/money-supply)

Inflation


## Notes

- In macroeconomics, the money supply is the quantity of money in circulation that an economy has at a time.
- Money supply can be defined as the quantity of the currency in circulation.
  - Each country may use the definition that best makes sense to them.
- It affects the [inflation](/zettelkasten/inflation).
  - If the money supply rises, inflation rises.
  - If the money supply decreases, inflation decreases.

## Questions

- Why does inflation increase/decrease if the money supply increase/decrease?

- Are there other definitions of the money supply besides "quantity of the money in circulation"?

## References

- [Wikipedia. Money supply](https://en.wikipedia.org/wiki/Money_supply)

## Backlinks
- [Inflation](/zettelkasten/inflation)

#inflation