Inflation is related to rising in the amount of goods and services constantly and fall in the purchasing power of the currency. Rise in the level of inflation can be good and can be bad for someone and it all depends on the viewpoint of the person. Rise in the prices of assets due to inflation can be a good thing for some people and fall of the currency can be a bad thing for a person who is dealing in cash transactions. Views can be different but the rise is constant in both the scenes. Rising inflation level has decreased the purchasing power of people and mainly middle class and the lower class people are most affected by the rise in inflation level in an economy. Measures have been taken by the bodies to control it but it is increasing with every day passing.
What consequences are we facing –
Mainly service class people and lower class people are dealing with this issue because the rise in the price of daily use items has increased which are affecting there monthly expenses.
People are finding it more difficult to go for a holiday to some other nation due to fall in the price of currency.
Low investment due to high prices is hindering economic development. Many businesses have come down due to high prices of materials.
The lending rate of banks are getting higher and people are finding it difficult to repay it back.
Unemployment is increased due to high inflation rates because organisations will find it difficult to afford any individual.
There is no such increase in the per capita income of the people.
Savings of the people are getting used up and it is becoming more difficult to survive.
Increase in the inflation rate impose some hidden taxes on us like if we purchase something we have to pay more taxes due to rise in the price of that commodity.
Nation’s exports are getting more expensive and it is affecting the balance of trade of the nation.
Although there are several measures taken by the government to stop this inflation rate but this is not slowing down even after using many fiscal policies and many other strategies. The consequences that we are facing today will become even worse in the coming future if no other big decisions are taken to slow it down. A complete analysis of everything should be done to know where we can do the cost cutting and use that money for our economic development. Rise in the per capita income, lowering the interest rate of banks so that people are more attracted to take personal na business loans, creating more job opportunities, allocating more resources towards people’s welfare will bring a little change in this picture and it will definitely help in the economic development of the nation. These problems are most common in underdeveloped countries and in the developing countries. Most of the developed countries are always prepared for all these kinds of situations.
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Investment can be termed as an asset which is done with the purpose to gain profit in the long time. We all do investment with a hope that it will pay off a good amount to us in our coming future but it is a risky thing. Investment can be done to gain something from the market like profit from shares and other equities and it can de done to expand and grow a business or project. Investment is always future oriented and it will yield results in the future and it is not mandatory that investment will always bring in some returns in the future, it can also go into vain due to some changes in market strategies coming of new market reforms and policies which can reverse the entire scenario.
Forms of Investment
If you are looking for something to invest in you can see many things in the market which can bring a very good return for you investment.
You can do investment in the real estate sector by purchasing some kind of building, buying some piece of land.
Another example of good investments are investing in gold materials which will definitely bring better return than your invested amount.
Investment in any kind of business or any kind of partnership can bring you good returns in the future.
Investing in some shares, mutual funds,stocks and bonds are a very good way of investing money.
Invest your money with the bank and get interest on that invested money.
Make an investment in some or other type of assets which can be become a quick source of liquidity at times of difficulty.
Things You Should Keep In Mind
Making an investment to secure your future is always a good move but you have to be very carefully before investing in any kind of venture and assure yourself that it will prove to be a good investment for you even if something went a little wrong in the future. There is always a rick in any kind of investment but the amount of risk depends on the amount of money you are investing and the type of item you are choosing as your investment plan. Just be confident before making an investment anywhere on anything and analyse the market and the consequences, drawbacks and advantages of your investment. Discuss with some but not with everyone. Do not ever tell your investment plans to others, you do not know what will come to the mind of that person after listening to your plans. Some people are very jealous and after hearing this news from you might not be happy and try to convince you that it is not a good move. There are many more reasons so you need to be active and rigid on your decision if you have made up your mind on investing your money somewhere..
Investment and Economic Development
Economic development gets a good push when people of the nation are doing more and more investments. Investment in you business will bring more returns not only to you but it will definitely increase the GDP of the nation and you all know that GDP is a common phenomenon used to determine the economic development of the country. More investment made will bring better products and services in the market which will raise the standard of living of all the citizens. Moe investment results in engaging more workforce to make use of that investment and more job opportunities can be created and unemployment can be reduced.
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Economy is made up by resourceful allocation of all goods and services in a community which will further help a nation in economic development. Economic structure comprises of different patterns of consumption, decision making processes, agencies, institutions, entities to help all communities. Basically economy is divided into three basic types which are – Market Economy, Mixed Economy and Planned Economy. Traditionally all the comparisons and analysis of economic systems were made on the basis of Market economy and Planned Economy and major distinctions were between capitalism and socialism but now most of the countries are based on mixed economy. Now we are going to discuss about the three major types of economies in brief to understand it a little better.
Market economy is a system where all the decisions regarding investment, production and distribution in the market are taken by looking at the market forces of demand and supply. Price of a commodity relies on the demand and supply of that commodity, these two forces need to meet at an equilibrium price for any particular service and goods in order to form the perfect price for that commodity. There is a government intervention in this free market system whenever government feels to avoid certain behaviors in the market by applying price ceilings in the market for products or by using fiscal policy. Allocation and distribution of all the resources are done by analysing the forces of demand and supply in a Market Economy.
Totally different from market economy planned Economy basically is an economy where most or all the production, distribution and allocation of goods and services are decided by the government. There is no such decision making power in the hands of business owners and private citizens like they have in the market economy. Planned economy has a less chance of inequality and low level of unemployment. The government here decide the prices of goods and services making it equal for the people of society. However you can see that these economies has a low efficiency of work.
Mixed economy is an economy where both private enterprises and government coexist and make all the decisions in accordance with each other. Mixed economy carries mostly all the advantages of a market economy. Both capitalism and socialism exist with each other in a mixed economy, making it more popular and more convenient for society needs. Government here provides the public goods and services to the society. Mixed economy promotes a healthy competition which eventually ends up being more profitable for the society. Most of the countries nowadays are moving to become a mixed economy in order to bring more economic development for the citizens of their nation.
These three main economies are actively present in the world and every country has its own way of thinking to adopt a particular economy style for their economic development. Most of the countries now think that mixed economy is the best way to promote economic development whereas there are some nations which prefer planned and market economy to be the best for their economic development.
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Financial Sector basically includes a set in institutions, markets and instruments which helps a nation in economic development. Financial sector primary motive is to cover the costs so that all the other processes runs smoothly within an economy. It is a process of acquiring information, reducing the overall costs, enforcing contracts and executing the transaction results in markets and intermediaries. If a nation is financially strong it contributes more towards the goal of overall economic development. Different combinations of transactions, information and costs with relation to different tax systems and legal systems has raised a variety of contracts, intermediaries many time in country.
Economic growth can be achieved by capital accumulation,boosting the saving rates,optimized allocation of capital, information regarding foreign investment and by encouraging more foreign inflow of money. Financial development is said to be directly related to the economic growth and it is one of the major role playing factor behind economic development. Countries with good financial growth enjoys a better growth in their standard of living. Financially strong countries also have a low poverty rate which is why their standard of living is high and less money has to be snd on this class which saves a lot of money that can be used in the further betterment of economy.
Finance sector has a significant impact on the industrial sector and majorly it helps in promoting small and medium scale business which requires more of the labour intensive techniques to fulfill their work. Easy finance facility is provided to these business units so that it can create more job opportunities for people and contributes more towards the economic growth of the nation. These small scale industries if promoted correctly will become a big unit one day and it will provide a better standard of living and facilities to their employees. Most of the developed economies always try to maintain a perfect balance between both professional and personal life so that every individual working never feels and kind of stress or burden on himself.
Finance can be further divided into many parts which makes it a very wide fields creating many job opportunities for all. Insurance, fund management, private banking, risk management, investment banking, accountancy are some of the example of finance sector and a person has a lot of options according to his interest. These sectors are different from each other and they offer many job opportunities to all the people. This is yet another way Finance sector is helping in the overall economic growth of the country by providing jobs to the deserving candidates which will contribute more towards the economic goals of the nation.
Main function of the financial institution is to maintain a sustainable financial growth by applying best techniques to allocate the funds and looking where it is needed the most. Analysis done by these bodies results in better funding, low risk and high income outcomes which increase our GDP and by this way financial development is directly related to the economic growth of the nation. A financially strong nation will always provide a better living and better access to everything to all its people.
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Developed Economy which is a characteristic of a developed nation which has a high standard of living, high economic growth and security with a high per capita income. A developed nation has the capacity to fulfil all the demand and supply of the nation without and difficulty. A developed nation never fails to provide the best of everything to everyone in the nation. Mainly three types of classification are there for economy –
Developed economies are those which has successfully developed themselves in providing every required amenities to their people and people are living a life with high standards. Biggest example of a developed economy is USA.
Developing economies are those which are on the way of development, there is something new and more innovative always going on for further advancement of the nation and its people. Example of such nation is INDIA.
Underdeveloped economies are those which are not developing or developing at a very slow rate. These economies are far behind in the overall economic growth and people here have a very low standard of living. Example of such nation is PAKISTAN.
We are talking about the developed economies here. Developed economies have worked very hard in the past to achieve this status so that their people can enjoy living there and they have every life comfort they wish to have. Most common way of identifying a developed economy is by calculation of its Gross Domestic Product and by calculating the Human Development Index.
Let us see some of the Key features of a Developed Economy below to get a more clear image of what we are talking about.
Developed economies are those which have relatively higher level of economic growth and security for their people.
Countries which provides education to all the children with equal rights and opportunities.
Countries which have developed technological infrastructure.
Countries where people have access to the best of health benefits.
Literacy rate of developed countries are very high as compared to others.
Birth rate is high and the death rate is comparatively very low.
Equal opportunities to work for every individual as per their skills and knowledge.
More and more people are engaged in working and very few people are jobless.
Every people are having a high per capita income and living a high standard life.
All the people living there are above the poverty line and have access to all the beneficial products and services.
Countries having a stable population and which has worked to limit its population growth.
These are some of the key features of a developed nation or economy and that is the main reason why people are willing to shift to these nations because they have a better standard of living. If you talk about USA, you can see people from different nations and cultures living there peacefully and enjoying their lives. Generally these people are those who went there to find a better life and ended up living there because they find it more secure and safe for them and their family.
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