So I understand that an increase in money supply will decrease the value of the dollar. And I know that increased monetary demands for goods will increase the price. I just want to know why is it that more money makes firms increase prices on their goods
In: Economics
When people have more money, they are able to spend more money on goods. If the people who sell goods are not able to produce more to keep up with the increased demand, maybe because the machines and workers in their business are already working as hard as they can, then the business can make more money by raising their prices and still selling everything they produce
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