Comments by "Sam" (@sam512) on "What will Trump’s second term look like?" video.
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@vinillywonttell2319 😂
Why are you so bitter?
But since you want to know:
Inflation occurs when the general level of prices for goods and services rises over time, which decreases the purchasing power of money. Several factors can cause inflation, including:
1. Demand-Pull Inflation: When demand for goods and services exceeds supply, prices rise. This can happen in a strong economy where consumers and businesses spend more, pushing up prices.
2. Cost-Push Inflation: If production costs (like wages and raw materials) increase, companies may pass these higher costs to consumers in the form of higher prices. This can happen due to shortages, rising energy costs, or increased wages.
3. Built-In Inflation: Often known as “wage-price inflation,” this occurs when employees expect higher wages to keep up with rising living costs, which in turn leads companies to raise prices to cover these increased wages.
4. Monetary Policy: When central banks, like the Federal Reserve or the European Central Bank, increase the money supply too quickly (through low interest rates or quantitative easing), it can lead to more money chasing the same amount of goods, driving up prices.
5. Supply Chain Disruptions: Natural disasters, geopolitical issues, or pandemics can disrupt supply chains, limiting the availability of goods and causing prices to rise.
6. Exchange Rate Fluctuations: If a country’s currency loses value relative to others, imported goods become more expensive, contributing to inflation.
7. Expectations of Inflation: If people expect prices to rise in the future, they may spend more now, driving up current prices and creating a self-fulfilling cycle of inflation.
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