Aryan says if the government just printed more notes and handed them to everyone, everyone would…
Aryan says if the government just printed more notes and handed them to everyone, everyone would become rich and poverty would end. His sister says it does not work that way. Who is right?
Who do you think is right? Pick one.
The answer: His sister is right, with the same goods, prices just rise (inflation); a note's worth is what it can buy
Why
Aryan is treating money as if it were wealth itself, so making more of it would mean more wealth for everyone. But money is only useful for what it can BUY, and printing notes does not create any extra food, cloth, houses, or trains. If everyone suddenly has twice as much cash but the shops still have the same amount of goods, sellers simply raise their prices until the extra money is soaked up — this is inflation. People are left holding bigger numbers that buy exactly what they did before, or less. Test it: countries that have tried to solve their problems by printing money have ended up with prices doubling in weeks and savings becoming worthless. His sister is right: with the same goods available, printing more money just pushes prices up — a note's worth is what it can buy, not the number printed on it.
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