After monetary injection, Tap will continue to produce the same amount of corn, and the demand will remain the same as well. Now that consumers have double the money due to monetary injection, consumers are willing to pay …show more content…
Therefore, sellers earn more for the same goods or services. Therefore, monetary injection helps the seller gain more money for the same goods and services, allowing the business to spend more money on labor. Inflation increases prices for consumers, but it also increases income for employees. As income increases, consumers have more money to spend. Therefore, monetary injection can help the economy grow.
As the government injects money into the economy, the price of corn will rise, and this will increase the cost of living for the residents of Tap. The rate that the price of corn rises will reflect the inflation rate associated with monetary injection. Monetary injection will increase the amount of money in circulation, and it will also increase the amount of money that businesses earn for the same quantity of goods and services. This will allow business to spend more money on wages. Overall, monetary injection will increase the price of corn and the CPI, but it will also help Tap’s economy