THE COVID-19 PANDEMIC LEADING TO INCREASED INFLATION
The concept of supply and demand has been around for thousands of years. Supply and demand was seen historically in the American colonies’ demand for tea in the seventeenth century, and the law of supply and demand was demonstrated when people nationwide bought a lot of medical supplies when the COVID-19 pandemic hit.
If there were a small supply of something, but it was popular and in high demand, the price of it would increase. At the same time, if there were a large supply of something, but it was still extremely popular, prices could also increase. Since there is high demand for the product, the prices increase.
When the COVID-19 pandemic hit unexpectedly, no one was prepared. Gloves, masks, even hand sanitizer had been bought in the past, but suddenly the country had an increased demand for these products. Many companies dramatically increased the production of these products in order to meet the international need for these products. Since supply and demand plays a direct role in our economy and inflation, the COVID-19 pandemic had a tremendous effect on the economy.
Companies were significantly impacted by the pandemic. Not only did they have to meet the increased demand for many products, but they now had to do it in a pandemic they knew essentially nothing about. They suddenly had to follow COVID-19 guidelines and restrictions, which were new to them. Many times mask mandates, barriers, and other COVID-19 protocols made production more difficult and expensive. Shipping prices as well as product prices had to increase due to the new precautions and expenses brought about by the pandemic. On top of all this, many workers wanted to be paid more, which only furthered the need to increase prices; this, in turn, contributed to inflation.
Furthermore, a study found that during the pandemic stimulus checks were tied to an increase in inflation. Since people suddenly had money they previously didn’t have; they could now purchase more goods. More than 2.3 million people nationwide received these stimulus checks, which increased the nationwide demand for products, even though supply didn’t increase. Over the last 12 months, inflation rates have risen by 7.5%. While inflation was always an existing concept, the COVID-19 pandemic has only made it worse.
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