Pedro Arantes
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Inflation

Inflation is the rise of the general prices of an economy in a period of time caused by money supply growth.
#economics
Zettelkasten, February 18, 2021
## Notes - Inflation is the rise of the general prices of an economy in a period caused by [money supply](/zettel/money-supply) growth. - Note that the general prices may increase, but the cause may not be by [money supply](/zettel/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](/zettel/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](/zettel/money-supply) growing rate is higher than the economic growth rate? ## References - [Wikipedia. Inflation](https://en.wikipedia.org/wiki/Inflation) ## Backlinks - [Money Supply](/zettel/money-supply)
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