If you've been around long enough, you might have noticed that things are more expensive than they used to be.

If you've really been around long enough, you know that things are a lot more expensive than they used to be.

This of course is known as inflation.

It's an economic condition that's been around throughout

history and almost everywhere on earth. In a few cases it's gotten so bad that it

strained the limits of imagination. Learn more about inflation and how it's

manifested throughout history on this episode of goods and services in an economy.

Or to put it another way, each unit of currency has less value and is able to buy less than it did before. This is distinct from an increase in the price of a single good or a category of goods.

To demonstrate the idea, I'll give a couple hypothetical examples.

Let's suppose that there is a rare winter freeze in the state of Florida

that does severe damage to the orange crop.

The number of oranges which will be harvested goes down,

as does the supply of other products such as orange juice.

Because the supply of orange juice drops so sharply,

by the laws of supply and demand,

the price will go up because there isn't as much orange juice to go around.

Eventually, more oranges will be

will be produced the supply of orange juice will increase and the price will

drop back down. This is not an example of inflation. This is just a

supply and demand issue with a single commodity.

People who would regularly drink orange juice either would have to pay more or shift to something else like

apple juice or grape juice until prices adjust.

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