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Money itself, as it is used in today, is an idea only. When money isn't backed by something solid it is less valuable than previously and causes things to cost more because of the lack of solidity of the money as it is only an idea and everyone is trying to capture the idea and make it concrete. Perhaps also because if there is more money in circulation in theory people have more money to spend, therefore they can afford to spend more.
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∙ 12y ago
Wiki User
∙ 10y agomoney circulation is main reason for the inflation. when money supply is increases then investments are also going to increases, employment rises, output rises, consumption increases, demand is also rises for the goods when demand rises, prices of goods is rises finally its leads to INFLATION..
From, Madhu..
Wiki User
∙ 13y agoThe equation MV = PT.
M = money supply V = velocity of money P = price level T = transactions
Therefore,
P = MV / T
Wiki User
∙ 12y agoThere is nearly a perfect, 1:1 relationship between inflation and the money supply. Generally, printing more money is the source of inflation.
Wiki User
∙ 10y agomodern measure of money
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What is the relationship between money and inflation?
There is nearly a perfect, 1:1 relationship between inflation and the money supply. Generally, printing more money is the source of inflation.
Is the relationship between the inflation rate and changes in the quantity of money macro or micro economics?
macro
What money supply growth exceeds the growth of the overall economy what is the result?
Inflation
Why production is the answer to inflation?
Due to inflation the money value goes up ,people have more demand but they don't have supply so as it leads to high price of commodity, its the picture of inflation. So avoid this the better way to produce more to set a link between demand and supply.
What is the solution to control inflation in an economy?
Decreasing the money supply. Monetary policies are concerned with the increase or decrease of the money supply.
What has the author M Thomas Paul written?
M. Thomas Paul has written: 'A re-examination of the long run relationship between money supply and inflation in India' -- subject(s): Inflation (Finance), Money supply
What is the relationship and proportioned powers that exists between the buyer and the supply?
The monetarist explanation of inflation operates through the Quantity Theory of Money, MV = PT where M is Money Supply, V is Velocity of Circulation, P is Price level and T is Transactions or Output. As monetarists assume that V and T are determined, by real variables, there is a direct relationship between the growth of the money supply and inflation. ChaCha again!
What is relationship between inflation and recession?
The relationship between inflation and recession is that a recession will cause inflation to go down. The reason for this is due to their being less money being spent due to the recession.
What is the relationship between money and inflation?
There is nearly a perfect, 1:1 relationship between inflation and the money supply. Generally, printing more money is the source of inflation.
Is the relationship between the inflation rate and changes in the quantity of money macro or micro economics?
macro
What money supply growth exceeds the growth of the overall economy what is the result?
Inflation
What do monetarians believe regarding inflation?
the main cause of inflation is the growth of money supply
What organization most affect the money supply?
inflation
Increase in money supply followed by an increase in prices?
inflation
Is it good to have over supply of money in the Philippines?
no...it will create inflation
How does Brazil control inflation?
by controlling growth of money supply
Why production is the answer to inflation?
Due to inflation the money value goes up ,people have more demand but they don't have supply so as it leads to high price of commodity, its the picture of inflation. So avoid this the better way to produce more to set a link between demand and supply.
