- Certain group of people getting rich in a certain area ->
- Inflation; rise in price in that area
- -> Affects of Income inequality
- Examples:
- High Housing price in an area (San Francisco) due to lots of tech companies settling in an area (with employees having high wages) makes life hard (prices going high) for people living in that area.
- In Teknaf, Cox’s Bazar (Bangladesh), Illegal drugs made some people filthy rich, which made the prices go up. (Affects of income inequality - made it difficult for common people) When the drug dealers got arrested, the prices went down. Within a few days prices of some products more than halved. [1]
- Money <> Goods, Services
- Some units have more money; less goods, services; Some have more goods, services; less money.
- Money - Supply, Demand
- Inflation.
- Macroeconomics
- Aggregate supply and Aggregate demand - inter-related
- Interactions among lots of units “over time”.
Aggregate demand declines -> Prices decline -> Firms have to spend less (less price for input goods) for producing products -> People buy more of the same products with less money -> Aggregate demand goes up -> Prices increase. => Stability in the long run (fluctuations in the short run).
- Better (informed) supply chain management -> Firms taking better decisions for prices, less products are wasted -> Effect on overall economy.
References
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