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What are the causes of inflation?


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April 09, 2014 4:48PM

give me the right answer of "causes of inflation"

The above remark does not answer the question. One way to create inflation is a method of borrowing done by governments. A government borrows funds on a long term basis from the World Bank, for example. The government now has funds to use for welfare payments. The welfare system now can use these funds to increase consumer spending with monies that have not been earned. The monies to pay for consumer goods, places a demand on the producers who now produce more products to meet anticipated demand. The end result is an increase in the money supply. The government has "created" funds based on a promise to repay the World Bank.