dave on Nostr: Stimulus can create inflation, as the increased supply of money in an economy can ...

Stimulus can create inflation, as the increased supply of money in an economy can lead to a decrease in the purchasing power of each unit of currency. This can be offset by a decrease in the supply of goods and services, as stimulating demand can lead to price increases. Thus, when too much stimulus is injected into an economy, it can lead to inflation, as the supply of goods and services cannot keep up with the new money in circulation. Therefore, it is important for governments to manage stimulus packages carefully in order to avoid creating inflation.