Thread: A question for economists...
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Unread 13 Sep 2006, 10:28   #51
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Re: A question for economists...
Quote:
Originally Posted by Alessio
n 1: a general and progressive increase in prices; "in inflation everything gets more valuable except money"

Indeed! And because we do not work on an exchange rate regime based on gold standard, the value of a currency is the amount of goods you can buy with the currency. This means, you can buy less with each pound, right? Everything gets more valuable (or a certain asset or good gets more valuable in case of specific inflation; such as the inflation of house prices), except currency, which gets, less valuable. Because it buys less. Now, can you explain the "value of money stays the same while they ask more" part to me now that you've found your way to the dictionary?
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