How does raising wages worsen inflation ?
In: 3656
Money is a token that represents the work you have done.
It doesn’t change how many things are in the shop, or how many people want them.
So if everyone gets more of these tokens, it doesn’t mean they can buy more with them, because they still represent the same amount of work done.
What happens is the price increases because the amount of things to buy in the shop doesn’t change.
Now, when the shopkeeper has to change the price, he has to buy a pen and paper to write the new price on. This costs him money too, so he has to increase the price just a little bit extra on top to cover this.
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