In Keynesian economics, the reason is that the change of total supply and total demand in the economy has led to the movement of price level.
In monetarist economics, the reason is that when the amount of money circulating in the market exceeds the amount of money needed for circulation, paper money will depreciate, prices will rise, leading to a decline in purchasing power, which is inflation.
This theory is summed up in a very famous equation: MV=PT.
2. stagflation (English: stagflation), referred to as stagflation or stagflation, in economics, especially macroeconomics, refers to the economic phenomenon that stagflation, unemployment and inflation are rising at the same time.
Generally speaking, it means that prices are rising, but the economy is stagnant. Is the result of the long-term development of inflation.
Stagflation, as a compound word, originated from the speech of British politician Ian mcleod 1965 in Parliament.
This concept is noteworthy in part because it is based on the post-war macroeconomic theory that inflation and economic recession cannot coexist, and also because it is generally believed that stagflation, like fiscal deficit, is difficult to cure once it starts.
In the political field, stagflation is measured by inflation pain index (simply the sum of unemployment rate and inflation rate), which is used to influence the presidential elections in the United States 1976 and 1980.
Extended data:
Manifestations of inflation:
Inflation will inevitably lead to price increases, but it cannot be said that all price increases are inflation. There are many factors that affect the price increase.
Writer 3 said: inflation writes the price history, and the relationship between supply and demand describes the price band. It is inflation that determines the price history and the relationship between supply and demand that determines the price curve. )
(1) The circulation of paper money must be limited to the number needed in circulation. If too much paper money is issued, the price will go up.
(2) The price of commodities is directly proportional to the value of commodities. With the increase of commodity value, the price of commodity will also rise.
(3) The price is affected by the relationship between supply and demand. When the supply of goods is in short supply, the price will rise.
(4) Policy adjustment and rationalizing the price relationship will lead to an increase.
⑤ Poor commodity circulation, poor market management and arbitrary charges and fines will also cause commodity prices to rise. It can be seen that only when the excessive issuance of paper money leads to rising prices is inflation.
Baidu encyclopedia-inflation
Baidu Encyclopedia-Stagnant Inflation