The Free Market Center
The Free Market Center
Inflationary Surge - Shoe Production Decreases
(Money Supply Increases for a Period)
| Shoe Production Decreases | -2.00%/Month |
| Wheat Production Fixed | 0.00%/Month |
Money Supply
Increases |
2.00%/Month |
In this case shoe production declines throughout. We have the same upward surge in money near the middle of the period.
Here the decline in production starts a trend of rising dollar prices. The surge of money artificially accelerates that rise.
The surge has no effect on direct exchange prices.
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The surge in money makes shoe production appear to decline even more than it has.