- Inflation is the rise of the general prices of an economy in a period caused by money supply growth.
- Note that the general prices may increase, but the cause may not be by 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 growing rate higher than the economic growth rate.
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 growing rate is higher than the economic growth rate?
This model creates an scenario in which a newspaper vendor must decide how many copies of the day's paper to stock in the face of uncertain demand and knowing that unsold copies will be worthless at the end of the day.Zettelkasten, July 22, 2021