How does money work?

[The_blue]

Was wondering today how money worked. I know the basics but stuff like imports, surly we buy in more than we sell, so where does the extra money come from?

Also inflation. Each year we get a pay rise, prices go up etc but where does the extra come from?


think i need to do econimics at night school

 

[The_blue]

It's a massive subject you are asking.. Home work by any chance?


Many things affect inflation.. House prices, fuel, greed are just a few.. For eaxmple, when fuel goes up, so do transport costs.. This has a knock on affect to the retailer who now has to rise his prices to make the same amount of profit margin. The consumer if then left with less money in his pocket and therefore wages are increased to allow for the difference in the cost living etc..

I'm 31 and in a full time job, thus the hours of thinking up questions for you lot

 

[The_blue]

aha if they did that, we wouldn't have to pay taxes..

There is only a certain amount of money in circulation and this is monitored by the Bank of England.

yes i know but as wages go up and costs as well then more money is needed.

made up example with silly amounts:-


say in 1900 the net wealth of the UK was 100,000,000

now in 2006 it was 500,000,000


where did the rest come from?