Imagine your neighborhood has only one pizza shop. Everyone wants a pizza, but there's not enough to go around, so the shop raises its prices. That’s like inflation when there are lots of jobs: more people want work, wages go up, and businesses raise their prices too. It all starts with too many hungry people (or workers) and not enough food (or jobs).
Examples
- A bakery opens up, and now there are more bakers, they demand higher wages, so the price of bread goes up.
- When everyone is working, restaurants charge more for meals because employees want higher pay.
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See also
- What are real wages?
- How Is Everything Outpacing Inflation At The Same Time?
- How Does Taxation Actually Affect Inflation?
- How Does the Stock Market Actually Influence Inflation?
- How Does Currency Devaluation Affect Everyday Life?