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Are high gas prices the cause or effect of inflation?

Asked by SquirrelEStuff (10007points) September 16th, 2008

I keep hearing the news say that the price of a barrel of oil has dropped, easing inflation fears. I was under the impression that increasing the money supply is what causes higher prices. (More money in circulation means the value of the dollar drops which means it takes more dollars to buy the same good/service) Can someone please explain why high gas prices means high inflation and vise versa?

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