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4. Does inflation cause a change in demand? Explain the role of inflation in determining demand.
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4. Does inflation cause a change in demand? Explain the role of inflation in determining demand.

User Pattle
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Answer:

Inflation is an increase in the general price level in an economy. It is probably caused by the relative increase in the amount of money in relation to the available economic production. If the social money supply increases and the country's production is not matched, the average price level will rise due to the increased demand for goods. Due to the price increases, the value of money, the purchasing power of money, decreases. You can buy less for the same amount, thus lowering demand.

User Martin Peter
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