Inflation occurs when prices rise due to growth in the supply of money.

Question

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Inflation occurs when there is a sustained increase in the general price level of goods and services over time. This can happen due to a variety of factors, but one common cause is an increase in the money supply. As more money is available in the economy, consumers have more purchasing power, which can lead to increased demand for goods and services. If the supply of goods and services does not increase to match this demand, prices will rise as consumers compete for the available supply. Therefore, growth in the supply of money can contribute to inflation.

Inflation Occurs When Prices Rise Due to Growth in the Supply