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Inflation Inflation is defined as “a period of rising prices when the
purchasing power of the dollar is falling.” What this boils down to is that as
time goes by the dollar bills worth decreases while at the same time prices
rise. Now when I say the dollar bill’s value decreases I don’t mean a dollar
reduces to ninety cents. What this means is that one dollar can no longer buy
you a pack of gum, that same pack will cost you one dollar and fifty cents. This
is a cause of many things. To start the largest influence on why inflation
occurs is the economic situation of a country.
If a country needs more money
spent on its resources or services one way of accomplishing this is to raise the
minimum wage. By raising minimum wage lower income families can now earn larger
amounts of money and therefore have more to spend on goods and services. However
as minimum wage rises so does the cost of goods and services. Since the
manufacturer of goods and services now has to pay it’s employees’ larger wages
it has to account for that spending by raising prices. In the end an equal
balance almost occurs however more money is being spent and transferred
throughout the market therefore making the economy stronger.
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