Quantity of Dollars Drives Prices

The charts below illustrate that an increase in the quantity of dollars may increase prices for everything, from movie tickets to the price of the stock market (Dow Jones). When there are more dollars, the value of each dollar with decrease (all other things being equal).

This chart shows how movie ticket prices rose in concert with the quantity of dollars. The relationship seems to be lessening since about 2010, and this could be due to the dramatic fall in oil prices, which have kept prices down, even though the quantity of dollars has risen steeply (see blue line below).

Quantity of Dollars vs Movie Prices

This chart shows the parallels between the stock market value (Dow Jones) and the quantity of dollars.

Quantity of Dollars vs. Dow Jones Avg

When prices rise, two things may have happened:

1. the value of the item went UP due to increased demand or reduced inventory

AND/OR

2. the value of the money went DOWN due to an increase in the quantity of the money or a decrease in the demand for the money

 

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