The law of supply and demand applies to this. The more money the country has in circulation, the higher the demand for most goods becomes because everyone has money to spend. And when it happens, the price of goods increases and that's one sign that the inflation rate increases as well.
A producer of goods or provider of services makes their goods and services more expansive if people are willing to pay for it or they will lower the price if they cant sell what they expected. But why is that a sign of inflation and what makes the units of money I own worth less?
I hope someone can point me to a beginner friendly source where I can learn about this. I am getting bits and pieces here but I cant create a bigger picture.
It's simple, our purchasing power becomes lesser due to inflation. Your $100 last year will still be $100 but its value for purchasing goods won't be the same as $100 before, depending on the percentage of inflation then it could be $90, $95 but not $100 anymore.I hope someone can point me to a beginner friendly source where I can learn about this. I am getting bits and pieces here but I cant create a bigger picture.