What is inflation? Inflation is often called “too many dollars chasing too few goods.” It’s when prices in a country rise across the board. If the prices of your snack, bread, gasoline, and many other things all rise at the same time, that’s inflation. Inflation means your money buys less than it used to.
Experts have different views on why and how inflation happens. One reason for inflation is an increase in the supply of money. Generally, when the supply of something goes up, the demand for it goes down. In other words, its value goes down. So when there is a lot of money circulating, each piece of money becomes less valuable. Another cause or inflation is a rise in production costs. This means it costs more money to make a particular product. The price of a candy bar may go up if the nuts in it are suddenly more expensive or if the workers making it are paid higher wages. Higher taxes can also cause inflation. When items are taxed, people who produce goods don，t want to see their profits go down. Instead, they raise their prices. This is called “transferring the burden to the consumer.”
Inflation is complicated. Track the prices of some goods you are interested in, and see if you can understand why they’ve changed over time.
【題組】48. Which of the following statements is true?
(A) Taxes help reduce inflation.
(B) Inflation is caused by one simple factor.
(C) Printing more money can lead to inflation.
(D) When your money buys more, that’s inflation.