What is money?

Money is ​

​- a commodity accepted by general consent as a medium of exchange.

-it can be paper, coins, digital, rocks, seashells whatever people agree on.​

What is inflation ?​

-A general increase in prices across the entire economy.

How do we measure inflation?

Consumer Price Index (CPI)

-Compares the cost of a "basket" of over 400 different goods over a period of time.

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What causes inflation?

Inflation has three main causes:​

-Cost Push: costs to businesses go up so prices rise.​

-Demand Pull: More people want a product so prices rise

-Monetary Policy: The government prints more money so it's worth less.​

-More demand for same supply

​- Supply shortages

- Supply ​shocks

Demand Pull

-Labor​

-Transportation

-Raw materials​

Cost Push​

Cost Push vs Demand Pull

Monetary Policy

The government creates "new" money

-Direct economic stimulus

-Adjusting interest rates ​

-"The Fed"​

Supply Shock

A sudden change in supply caused by a unexpected event i.e. natural disaster, war, pandemic

​-The great toilet paper shortage

-Texas winter black outs​

-​Russia invades Ukraine

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