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?
Lv 4
? asked in Social ScienceEconomics · 4 months ago

Question about inflation?

Does money devalue over time?

2 Answers

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  • ?
    Lv 7
    4 months ago

    Yes, if you compare $1 in 1850 with the same dollar in 2020, you will the obvious yes answer. There is also the chipmonk available on the net. The question is why? Based on the exchange equation, it is because of the increase in money supply is faster than the growth of the real GDP. But based on Keynes, it is always the situation that create inflation. There are three of them, demand pull, supply pull and institutional inflation. In the classical model, it insists also that the price must rise to compensate the wage increase if the equilibrium is concerned.

  • Anonymous
    4 months ago

    Not necessarily, but it does whenever everybody raises their prices.

    In 2019(?)  the european central bank created 80 billion(?) euro every month in an attempt to create inflation, and failed

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