How does an increase in money supply effect inflation?

Economics
Tutor: None Selected Time limit: 1 Day

How does an increase in money supply effect inflation? 

Dec 7th, 2014

An increase in money supply increases inflation. When the money supply increases the wages go up and people  have more money to spend.  This increases the prices for goods. As a result, it generates inflation.  In some instances, when a government irrationally increases the money supply as it has happened in Brazil and Argentina in the past, the inflation skyrockets and hyper inflation occurs.

Dec 7th, 2014

Did you know? You can earn $20 for every friend you invite to Studypool!
Click here to
Refer a Friend
...
Dec 7th, 2014
...
Dec 7th, 2014
Dec 4th, 2016
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer