the link between inflation and mone

the link between inflation and money
because inflation is a rise in the general level of prices, it is intrinsically linked to money, as captured by the often heard refrain "inflation is too many dollars chasing too few goods". to understand how this works, imagine a world that only has two commodities: oranges picked from orange trees, and paper money printed by the government. in a year where there is a drought and oranges are scarce, we'd expect to see the price of oranges rise, as there will be quite a few dollars chasing very few oranges. conversely, if there's a record crop or oranges, we'd expected to see the price of oranges fall, as orange sellers will need to reduce their prices in order to clear their inventory. these scenarios are inflation and deflation, respectively, though in the real world inflation and deflation are changes in the averoage price all goods and services, not just one