Money In America. A Basic Idea Of How The Money Goes Through Everyone's Hands

517 words - 2 pages

The nation's economic stability has many factors whichamount to inflation. Inflation may be caused by a number ofproblems, but there are some specific examples which havedirect control over which way the prices and spending sway.Inflation simply means that the American dollar, in thiscase, is less valuable on the foreign exchange market andthe gold standard is moved to higher prices; which simplymeans that more currency is needed to exchange for gold.Any slight change in investments or a company's costpremium could change the entire economy because of thedomino effect acting on the rest of society. For anexample, flooding in a particular region of the countrycould cause inflation. In the long run, the flooding may becatastrophic for businesses because it could cause ashortage of products. In order for the businesses to makeup for any lost income, they must boost their prices andmake the profit margins go up. The profit margins make upfor the lost income and balance out that particular company,but everyone else must suffer the consequences. In thebusiness world; the more they produce, the less they cansell for; the less they produce, the more they sell theproduct for.Profit margins can have a direct impact on theconsumer. The more an item cost, the less a consumer willwant to purchase that particular good. Higher profitmargins may be able to balance a company's budget, butunless their product is in very high demand, most peoplewill want to buy the product. The lack of people purchasingthe item may cause the company to lose money and have...

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