The economy is an interconnected system that relates to production, consumption and trading activity that strongly determine the way resources are allocated among the participants. The system is used to fulfil the demand of those who are living in the economy.
The economy is divided between the world economy and the country’s economy but are still correlated with each other. In a country, goods are produced and distributed within the country to satisfy the people’s demands. When the market starts to become bigger, the government start to seek goods from other countries. This is how export and import were introduced.
The exportation and importation of goods are not something that is new to the world’s economy. It dated back to the Roman Empire where European and Asian traded goods across the land of Eurasia. Export and import are essential for the economy to keep thriving and for the merchant to have a variety of products for them to sell.
This year, our world economy has seen rapid changes, especially in the stocks and supplies price. The inflation rate also has been increasing swiftly that affects all people around the globe. Some economic experts mentioned that the vivid flow of inflation rate is due to the pandemic that hit the globe two years ago. The covid-19 virus had halted a lot of the world’s economic flow due to the lockdown policy.
What is inflation? Inflation is the increasing prices of goods and services in the economy. When this happens, each unit of currency manages to buy fewer goods and services. Therefore, the purchasing power of money will ultimately see a reduction.
Inflation only causes a change in goods and services prices. However, labour’s salary remained the same. This is why people are scared of inflation and deemed it the worst thing to happen in the economy.
In general, an average adult has the commitment to pay for rent, a car, gas, groceries etc. When they have been calculating everything they need to pay in a month within their basic salary, they have enough balance to get by. Unfortunately, when these payments increased, they will not have enough money in their pocket. They will need to get some money from their savings and that’s where the chaos started.
In one academic research, most young adult in the world doesn’t have enough savings by the age of thirty. Some admitted that they lack discipline in saving money and fall for their wants instead. However, most of them mentioned that the prices of goods and services are increasing daily which makes it hard for them to save money. They needed to live and pay all their commitments.
How Pandemic Causes Inflation
When the pandemic happens, most countries in the world started a lockdown policy. No one can get in, no one can get out. It goes the same with goods and services. A lot of business has been declared bankrupt because they are missing their market and targeted audience on a larger scale.
Not just that, the country also needed to use local supplies to entertain the demand of the people and to make sure everyone gets food. When these supplies decrease, some countries started to make rationing for their people.
When the pandemic stopped, everything seems to function just like it was. However, due to the loss that most company experience, they started to increase the price of their goods and services to cover the loss and make more profits. Like a domino, when one price starts to change, others will follow and the inflation starts without us knowing.
Plan. Back in the old days, we jotted down our expenses in a billing book or a money journal. This is to keep track of where our money goes. With digital payment, money seems like just a number to us now. We keep swiping our cards without caring about the balance in our bank account. To survive inflation, start to plan your expenses. Contradict your want and your need. Make sure to spend your money on important things only.
Insurance. People buy insurance to have a money guarantee in case of an emergency. With the lesser savings young adults have these days it is wise to buy health insurance plan for young adults malaysia. This is a step that you need to take before inflation happens to make sure that you have assurance in the future. We never know where our fate brings us. It is never too late to be prepared.
Increase Interest Rates. This is one way to overcome inflation by the government. The interest rate will be increased to slow down economic growth. When interest rates become higher it will lessen the spending of consumers and businesses. This need to be done to maintain the money currency and avoid the inflation rate becoming more worst.
Price Control. Another method from the government in overcoming inflation. Government need to be stern in deciding the maximum and minimum market price of goods and services to stop merchants from putting an expensive price on their products. Controlling the price also can help people to avoid unnecessary spending on things that they want rather than things they need.
Investment. Making a good investment doesn’t hurt you. Invest in stocks because most companies will pass the increasing price to their customer so that they will not reach the bottom line. Over the years, they are proven that stock prices overcome inflation by a huge range of margins. Make sure to learn about the company that you investing in so that you will not experience magnificent losses in the future.
To conclude, the changes in our world’s economy are the effect of consumer behaviour. When a steady pattern changes, it will affect others thus making rapid changes in the economy’s flow. As a young adult in society, it is always better to have a backup plan to survive in this unbalance economy. Refrain yourself from buying useless things and keep that money for a better future instead.