Inflation - Wheat Increases

The Free Market Center

Inflation—Deflation

Inflation - Wheat Production Increases

(Increasing Money Supply)

Wheat Production Increases

Shoe Production Fixed	0.00%/Month
Wheat Production Increases	1.50%/Month
Money Supply Increases	0.50%/Month

We continue with the steadily increasing money supply, but now we change the production of wheat. In this case wheat production increases.

The increasing money supply has the same countervailing influence on the dollar price of wheat that it did with shoes. Wheat production rises, so dollar prices should decline. Because of increasing money, however, they rise instead.

Notice also rising dollar prices for shoes, while production has remained unchanged.

Direct Exchange

Again direct exchange prices tell a different story.

Next, we'll look at the effect of declining wheat production.

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