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Published: Apr 09, 2021 7 min read
A simple banana in the spotlight with a fluctuating price tag that reads $1 then $10 then $100
Rangely GarcĂ­a / Money

Imagine if a helicopter suddenly dropped $5,000 on every person in the country. Lots of people would want to use the cash to buy stuff, right? But there wouldn’t automatically be more stuff available for them to buy. As demand outpaced supply, prices would rise.

It's an oversimplification that, in a nutshell, describes what some experts are worried could happen in the post-pandemic economy. They join a growing chorus of voices raising concerns about inflation, leading to alarming headlines and quotes about how "investors should be prepared for the biggest inflation scare in America" since the 1980s.

But how worried should you, a non-expert, be? Here's everything you need to know about inflation.

What is inflation, and why is it in the news right now?

The basic definition of inflation is a general increase in prices across the board, says Scott Baier, chair of the John E. Walker department of economics at Clemson University. We're talking about everything from the price of bananas at Trader Joe's to the price for the gas in the semi trucks that deliver them.