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Economics

Inflation

Imagine you have 5 stickers, and your friend has 5 toy cars. One sticker buys one car. Now, imagine you find a box with 100 more stickers! You are rich! You want to buy all the cars. But your friend only has 5 cars. Since you have so many stickers, your friend says, "Now you need 20 stickers to buy one car!"

That is inflation. When there is too much money (stickers) but the same amount of stuff (cars), the stuff gets more expensive.

🗝️ Key Takeaways

  • Prices go up when there is too much money.
  • Money buys less stuff than before.
  • It is like stickers losing their value.