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It is known as inflation. The basic concept is this: the value of money works in a spiral. When workers begin to earn more money, people and buisnesses begin to charge more for products, so the cost of living goes up, therefore the nominal value of money is worth less and workers must earn more money, usually resulting in demanding that employers pay them more. With more money in the system, people buisness begin to charge more for products, and the cycle continues.

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11y ago

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