What do you think is the main reason why inflation happens?

Question

What do you think is the main reason why inflation happens?

Answer 1

Many reasons.  But I think one of the main ones is that the money supply has increased.  part of the reason for that is because the FED has reduced interest rates.  They did so in order to revive the economy.  However, it had a ineffective side effect.  Inflation rose because of interest rates being cut.  So the money supply grew and our currency became one that had less value.  Because of that goods have higher prices and are worth more (dollar worth less and goods will cost more to purchase).

Answer 2

There are many reasons why inflation happens, depending on a number of factors. For example, inflation can happen when governments print an excess of money to deal with a crisis. As a result, prices end up rising at an extremely high speed to keep up with the currency surplus. This is called the demand-pull, in which prices are forced upwards because of a high demand. Another common cause of inflation is a rise in production costs, which leads to an increase in the price of the final product. Inflation can also be caused by international lending and national debts. As nations borrow money, they have to deal with interests, which in the end cause prices to rise as a way of keeping up with their debts. A deep drop of the exchange rate can also result in inflation, as governments will have to deal with differences in the import/export level. inflation can be caused by federal taxes put on consumer products such as cigarettes or fuel. As the taxes rise, suppliers often pass on the burden to the consumer; the catch, however, is that once prices have increased, they rarely go back, even if the taxes are later reduced.  If you want to learn more about infation, visit www.viritix.com.