What economic condition is referred to as "too many dollars chasing too few goods"?

The phrase "too many dollars chasing too few goods" describes a scenario where the money supply in an economy is so high that it outpaces the available goods and services. This imbalance typically results in inflation, as consumers compete to purchase limited products, driving prices up. In this context, inflation occurs when the overall price level rises due to increased demand outstripping supply. This economic condition highlights the direct relationship between the money supply and the purchasing power of consumers.

Deflation, on the other hand, refers to a decrease in the price level, often resulting from diminished demand or an oversupply of goods. A recession signifies an economic downturn characterized by declining GDP and rising unemployment, rather than an imbalance of dollars and goods. Stagnation describes a prolonged period of low growth and high unemployment, but it is not specifically related to the dynamics of the money supply causing price increases. Thus, in this scenario, the concept of inflation is the most accurate descriptor of the condition being discussed.