USA HISTORY

Detailed explanation-1: -Long-lasting episodes of high inflation are often the result of lax monetary policy. If the money supply grows too big relative to the size of an economy, the unit value of the currency diminishes; in other words, its purchasing power falls and prices rise.

Detailed explanation-2: -Conclusion: Supply of money and inflation are positively co-related to each other. If supply of money increases in an economy and production/ supply of goods/ services do not follow it, then inflation increases inevitably.

Detailed explanation-3: -Inflation raises prices, lowering your purchasing power. Inflation also lowers the values of pensions, savings, and Treasury notes. Assets such as real estate and collectibles usually keep up with inflation. Variable interest rates on loans increase during inflation.

Detailed explanation-4: -Changes in the price level (inflation or deflation) When there is an increase in the price level, the demand for money increases. Conversely, when there is a decrease in the price level, the demand for money decreases.

Detailed explanation-5: -Effects of Inflation When there is inflation in the country, the purchasing power of the people decreases as the prices of commodities and services are high. The value of currency unit decreases which impacts the cost of living in the country.