Does Printing Money Cause Inflation?

Link between money and inflation

In theory, there is a strong link between the money supply and inflation.
If the money supply rises faster than real output, then prices will usually
rise. This means if a Central Bank prints more money, we will often (though
not always!) get higher inflation.

Therefore, increasing the money supply faster than the growth in real
output will cause inflation. The reason is that there is more money chasing
the same number of goods. Therefore, the increase in monetary demand causes
firms to put up prices.




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