Tuesday, March 20, 2007

Supply and Demand

"Hey! I'm not going to trade 5-for-1 any more. You have so many of those I won't even trade 1-for-1 any more."

A good analogy/thought. So, I tell this to my daughter and follow up with: "So the African person with his newly printed money goes to the shop to buy some goods, but the shopkeeper says ...

a) The price has gone up, give me even more money
b) No I don't want your money at all, I can get money from someone else there is lots of it
c) Something else'
"?

The CD lesson might point to b) above. But would a) be the actual fact? If it is then she'll say, but the African person has a LOT of money now so he can afford to give as much money to the shopkeeper as is necessary. For an extra 1 million printed dollars (which must be negligible compared to the currency in circulation) I would say she would be right to think that.

Thanks for your ideas, teaching small ones is not easy!

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