Principles of Macroeconomics / Unit 16 MAC 1516 short lesson, about 20 seconds
Inflation Where It Is Not Solved
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The idea
Where inflation runs very high the mechanism is almost always the same: a government covering large deficits by creating money. That is unit twelve's equation of exchange made concrete.
In practice
Sustained inflation of this kind has reached tens, hundreds and in extreme cases millions of percent.
Where people slip
Monetary policy can prevent this, and there is no long-run gain from allowing it.
Your place on the trail
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