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Math Help - wealth and inflation

  1. #1
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    wealth and inflation

    Okay. I have this problem.
    If wealth goes up, supply of bonds goes up, because borrowers know they'll be able to pay back; and demand goes up because people can invest. the result is that bond quantity and bond price both go up. (if you plot the graph you can see it). Okay. Now, what about inflation?
    In my notes, I wrote that if wealth goes up, so does inflation. Why? Thanks.
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  2. #2
    is up to his old tricks again! Jhevon's Avatar
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    Quote Originally Posted by 0123 View Post
    Okay. I have this problem.
    If wealth goes up, supply of bonds goes up, because borrowers know they'll be able to pay back; and demand goes up because people can invest. the result is that bond quantity and bond price both go up. (if you plot the graph you can see it). Okay. Now, what about inflation?
    In my notes, I wrote that if wealth goes up, so does inflation. Why? Thanks.
    This may help. Look under Causes.
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