      The first reaction to this paradigm is that employees are earningmore. If employees earn more, then they have more money to spend, whichresults in increased demand for goods and services. Although competitionkeeps prices in check to a certain extent, overdemand and undersupply willeventually cause prices to go higher. Higher prices translate into lessgoods and services that a person can buy with a dollar. This can also bestated as decreased buying power of the dollar, or inflation.