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Provide an example of a situation in which there are too many dollars chasing too few goods


In a situation where the weather is awful in South America where bananas are mainly produced and it causes a bad crop year. There will be too many dollars and too few resources of bananas for people to purchase. This will cause the prices to increase and high demand for bananas specifically. It could also shift preference away from bananas for others to spend money on a comparative fruit…


In such a situation where their are many dollars chasing few products ,it will lead to a fall of value of a dollar since its circulation would be high.the price for products increase and this will lead to a surplus since the producers will desire to earn more profits


For instance, in North America when the demand for cheese exceed it’s supply the price of cheese will rise up automatically due to an increase in it’s demand and 2kg of cheese which hitherto was sold for $50 can now be sold for $150 due to it’s scarcity and this type of inflation is known as demand-pull inflation.


As a result of inadequate provide of subsidise by government to support farmers in the production of cassava plantation in the upper part of Ghana there was a reduction in production which led to the supply of few cassava and as a result demand increased whiles there was a reduction in supply and this led to scarcity