Every country has something to offer to another; and every country depends on another for some resource to either produce or use. To offer something, the country needs people to do the job. So if the demand is low for what the country has to offer, then it will require less people to do the job. If the country doesn’t have the right people to do the job then it can’t supply to meet the demand and therefore potentially lose out on sales. The more people with job, increases the demand for housing, infrastructure and tourism. When there is a right balance of trade and employment, the country will prosper. If there is an imbalance or the growth rate of production and employment is far below sustainable growth, then the economy is in trouble. It will require a push from the government and the monetary authority of the country i.e. people in charge of printing money (e.g. reserve bank) to get it back on track.
The push is referred to as economic stimulus, i.e. stimulating the economy.
Continue reading “Federal Budget vs. Unstable Economy”
The previous blog post explains that the money supply is determined by the workings of the economy and when left unmanaged it could have an ill effect on the nation’s currency value, which in turn affects the economic prosperity and welfare of a nation. The central bank’s weapon to combat this ill effect is the monetary policy.
Excessive money supply reduces a nation’s currency value. To prevent this, there are different ways to limit or ‘anchor’ the money supply, a.k.a. Monetary Anchor Options. The popular ones are inflation targeting, exchange rate targeting and product-price targeting.
Continue reading “Monetary Policy Basics”
As explained in an earlier post, interest rates have major effect on the housing market. I would like to take you through the journey of finding out what causes the interest rates to rise and fall.
Continue reading “Rise and Fall of the Interest Rates”