Inflation
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- Okay mom!
- We need to get some stuff from the store before prices start going up. Everyone else is doing it and I want to be able to get what I need.
- See, we got here in time! Now I can buy stuff at a cheaper price because I know there is a chance of inflation in the future. I heard about it from my friends, we need to buy as much as we can!
- This will lead to an increase in demand
- I don't think these facts are very official
- The prices here aren't bad but in a few months they will cost more. Grab a toy!
- In a situation where people expect the possibility of inflation. It can actually cause more inflation than what it would originally be
- So once people start to expect inflation, they will buy things now to avoid future inflation . That increases demand, which then creates demand-pull inflation.
- In this case, if inflation expectations rise by one percentage point, actual inflation will tend to rise by one percentage point as well.
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