Answer:
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Answer:
Reduce, increase
Explanation:
If a high inflation rate leads people to reduce their money holdings, this may lead to a further increase in the money supply and increase inflation.
Inflation will cause individuals to spend more more money thus the tendency to reduce money holding to meet cash spending. This in turn will lead to increased cash in circulation and thus increase in inflation.
Answer:
Explanation:
Supply and demand should be thought of together. Suppose you need a hairbrush. You go to your local pharmacy and ask one of the clerks if they stock hairbrushes. They say no they don't. If the pharmacy is supposed to have hairbrushes and they don't, then the supply side does not meet the demand. That's too little supply.
So next you try the nearest grocery store and they say "Yes. For you it's $2.99."
Now you represent the demand, and the store represents supply. They have the hairbrush you want. But the store won't stock hairbrushes if in the last year, you are their first customer who wanted a hairbrush. You still provide the demand, but there is no supplier. So you go without a hairbrush.
The same thing can happen to the supply side. The store has 25 hairbrushes. You only want one. There are too many brushes on the supply side. The store, if they do that with everything, will go broke. Too much supply is just as bad as not enough.
