Will Printing Money and QE cause Runaway Inflation?Watch this video on YouTube After the First World War, the German government were left with huge debts and reparation payments to the Allies. Faced with striking workers the government began printing money to pay workers higher salaries. It gave the government a temporary breathing space, …
A look at the effect of tariffs on consumers, government tax revenue, domestic firms and net economic welfare.
When displaying time series data, it often makes sense to use index numbers. Index numbers are a simple way of making it easier to compare numbers over a period of time. Index numbers measure relative changes in the price of a sum of representative data. For example, the FTSE-100 is an index displaying the average …
In the 1970s Venezuela was widely admired for its functional democracy and the highest living standards in Latin America. There was good reasons to be optimistic. Venezuela has the largest known reserves of oil in the world. Greater than Saudi Arabia, Iran and the US. Yet in recent decades, the economy has lurched from crisis …
Reader’s Question: Why does printing money cause inflation? Does this always occur? Summary If the money supply increases faster than output then, ceteris paribus, inflation will occur. If a government prints extra money, households will have more cash and more money to spend on goods. But, if the amount of goods stays the same, the …
Definition – Demand is price inelastic when a change in price causes a smaller percentage change in demand. It occurs where there is a price elasticity of demand (PED) of less than one. Goods which are price inelastic tend to have few substitutes and are considered necessities by users. Diagram of price inelastic demand For …
There is no doubt that as the economy emerged from Covid lockdowns in 2021, the world experienced a surge in inflation, not seen since the 1970s. There are many supply and demand factors, which have caused this unexpectedly high inflation. The first factor is that Covid lockdowns, especially in China and Asia, disrupted global supply …
In theory, there is a strong link between the money supply and inflation. If the money supply rises faster than real output, then prices will usually rise. This means if a Central Bank prints more money, we will often (though not always!) get higher inflation. Explanation of why increased money supply causes inflation The money …