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What Does "too Many Dollars Chasing Too Few Goods" Mean? |
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Answer» Imagine if all the banks in the United STATES SIMULTANEOUSLY placed an extra $500,000 in every bank account. Most people would probably rush out to spend a good bit of this MONEY. Let's say most of them decided to buy a new car. UNFORTUNATELY, carmakers would not have enough cars to SATISFY everyone. The likely response by car makers would be to raise their prices. In other words, too many dollars (people with "extra" money) chasing too few goods (cars). Imagine if all the banks in the United States simultaneously placed an extra $500,000 in every bank account. Most people would probably rush out to spend a good bit of this money. Let's say most of them decided to buy a new car. Unfortunately, carmakers would not have enough cars to satisfy everyone. The likely response by car makers would be to raise their prices. In other words, too many dollars (people with "extra" money) chasing too few goods (cars). |
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