6 Things To Know About Inflation

By Jake and Adriana

#1. What is Inflation?

Inflation is a situation where something cost more then it used to cost. As inflation rises every dollar you own buys less percentage of a good or service. People think that inflation is going to expand and the economy is going to crash.

#2. Causes of Inflation.

The increase of general prices over time.

3 main causes of inflation: Demand and Pull Inflation , Cost Push Inflation, and Expansion of Money supply.

Demand and pull- the most common and when demand for a good or service increases so much that it outstrips the supply.

Cost Push- A shortage of supply combined with enough demand to allow the produce to continue to raise prices.

Expansion of Money supply: An over expansion of money supply. The prices of everything increase while the supply and demand stay the same

#3. How to Profit from Inflation

People that sell goods are benefiting the most from inflation. They increase their prices and make more money.

#4 The Unites States and Inflation

The U.S inflation increases 1.5%, It has increased through the past few years. Gas has gone down in price from 1.7% to 1.0% and food prices went up to 1.1% to 1.8%. U.S inflation over the past 12 months eased as consumer prices in March retreated for the first time in months.

#5. Dangers of Inflation

Inflation causes deflation. Deflation is prices declining over time after inflation, which can lead to countries going into debt. The value of a dollar can go down when deflation happens.

#6. How inflation causes unemployment.

When inflation happens unemployment percentage raises. In the United States the Federal Reserve is striving to get inflation up to 2% in order to reduce unemployment.