Money and Economic

Money is something that we need, and it is important worldwide.
Without money, there will be

no transaction to enhance the economy income. The development of economy is based on
transaction which is one people going to buy and the other is selling. People businesses , bank
and government are all engage in transaction where they exchanging money and credit. An
increase in the supply of money typically lowers interest rates, which in turn, generates
more investment and puts more money in the hands of consumers, thereby stimulating spending.
Businesses respond by ordering more raw materials and increasing production. The increased
business activity raises the demand for labor. The opposite can occur if the money supply falls or
when its growth rate declines.
Inflation is the gradual increase in the cost of goods and services across the economy, which
erodes the purchasing power of consumers and businesses. In other words, your dollar (or
whatever money you use) will not travel as far as it did the day before. To comprehend the
consequences of inflation, lets compare the price of a regularly consumed item from different
time periods.For example, in 2001, the average price of a cup of coffee was 25 cents, in 2019, it
was MYR 1.59. Therefore, you could have purchased approximately three cups of coffee for
MYR 5.00 in 2019, compared to 20 cups in 2001. This is inflation, which is not confined to price
spikes for a single product or service; it refers to price increases across a sector, such as retail or
automotive, and, ultimately, a country's economy.
The other example of inflation is when the price of oil is rising.The effects for the country the
produce the oil and import to the world is they will gain more benefits then others county who
export the oil from their country. Due to the high demand, the oil price need to rise. Therefore,
the economy will slightly rise after the high demand and the production of other products that
using the oil such as plastic industry and more also will increase the production along the oil
consumption.The higher the demand the more people spending money on and it will triggers the
production to meet the demand.This kind of inflation will also make the debtors easy to.Lastly,
the household maybe find this problematic for them due to price of oil increase the others
household thing will also increases such as gas and more. But if their country's income is higher
along the production will not be a problem.
Some country might effected by the rise of the oil price and this will cause their country to have
the another alternative, like in debt in order to exchange the oil. Therefore, this will effects the
economy collapse such as more unemployment(During economic downturns, the conventional
response is to lay off staff. When businesses are unable to generate adequate profits, they cannot
afford to pay their employees their present salaries, let alone pay them at all.), the country will be
in debt and the county will declared bankrupt.The society will face the huge problem due to the
effects above.The conclusion is inflation has pros and cons for each country.
Deflation is the decline in the value of assets or the cost of products and services. Deflation,
often known as a negative inflation rate, happens when prices decline. As prices decline,
consumers' purchasing power grows, allowing them to acquire more goods and services with the
same amount of money. Deflation is distinct from disinflation, which refers to an inflation rate
slowdown.
Deflation example is based on the true event which is A single area of the economy, such as
technology, automobile, manufacturing, etc., also contends with stagnating prices. As the Covid-
19 pandemic expanded over the globe, a significant number of Chinese enterprises fell into a
critical state of deflation.In April 2020, China's Producer Price Index was 3.1% lower than in
April 2019. Oil price reduction, slow demand, and declining pork consumption were viewed as
significant reasons to price stagnation.
Deflation will cause the unemployment.During economic downturns, the conventional response
is to lay off staff. When businesses are unable to generate adequate profits, they cannot afford to
pay their employees their present salaries, let alone pay them at all.Next, the production will be
slowdown, since consumers are purchasing less, firms will respond by delaying or halting
output.Higher interest and debt,When prices fall, the actual interest rate of a country changes.
This refers to interest rates that are changed to better correctly represent the worth of products.
As a result of poor consumer confidence, individuals spend less and save more. Again, interest
rates tend to climb during deflationary periods, leading to an increase in both personal and
business debt. The accompanying payments are also more expensive. This can then result in
compound interest.
The deflation occurs when unemployment and poor earnings leave less money in the hands of
customers, a sluggish or recession-stricken economy leads to an unsustainable price decline.
They spend less and save more, which reduces aggregate demand and investments, resulting in
price declines.Another important factor is perfect competition in a given industry or area, which
compels businesses to lower product prices in order to survive. The IT sector frequently faces
this challenge. The phenomenon may also result from decreased production costs. As a result of
technological progress and the discovery of new, less expensive resources, the cost of production
plummets. Overall drop in inputs reduces product or service pricing.

Money and Economic

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Money is something that we need, and it is important worldwide.

Without money, there will be

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