The Economic Recession and Economic Ascent
The economy is a cycle of demand and supply of commodities into the market. This cycle has been circling for thousands of years in the history of mankind from Egypt to London , Rome to New York. Our economy has gone passed thousands of years in the history of economy. We have seen evolvement and down turn of so many economics ,bourgeois or communist as well . But we have to step forward a few more to control and deliver an appropriate economy for the globe. This economy got birth own self or we found it for purpose and that purpose made this economy such big . So that we have to find out why and ;how a economic recession on economic ascent goes through an economy , a unknown primary question of history of history economics------------------.
The cycle of economy depends on two things
A) Demand
B) Supply
A) Demand:- Demand depends on two things
A) Utility ( Utensils) B) Attractability
B) Supply :- Supply depends on two things
a) Processing (Products ) b) Delivery ( Raw material or others )
So, Both demand and supply depends on Production
Materials can be of two type.
1) Never vice able even after processing.
2) Vice able before or after processing.
The production keeps the current of supply on.
So, to keep your economy alive you have to keep the of production to keep .supply of products in the market.
Usually the production of Micro Economy from vice able materials depends on these things : -
a) Land (L)
b) Raw Materials (R)
c) Processing (P)
d) Machinery (M)
e) Quantity Production (Q)
f) Demand (D)
g) Affordability (A)
h) Marketing (Mr)
i) Wages (W)
j) Cost (C)
k) Price (Pr)
l) Sell (S)
There after giving below a table how profit (Pt) changes according to the change of twelve factors :-
L | R | P | M | Q | A | Mr | W | C | Pr | D | S | Pt |
2x | 2y | 2z | 2p | 2q | 2n | 2s | 2t | 2w | 2L | 2m | 2n | 2o |
x | y | z | p | q | n | s | t | w | L | m | n | O |
2x | y | z | p | q | n | s | t | w | L | m | n | O |
2x | 2y | z | 2p | 2q | 2n | 2s | 2t | 2w | 2L | 2m | 2n | O |
2x | 2y | 2z | 2p | 2q | 2n | 2s | 2t | 2w | 2L | 2m | 2n | 2o |
In the table over , we can see that , every factor over there have to be in certain number , even a single factor stay x time low fall those factor which are proportional to profit , the profit will stay x time low.
If all the factor stays maximum (all those factor those are proportional to profit) and all those factors, those are inversely proportional to profit stay minimum profit in the balance sheet can be booked at maximum level.
This is how a micro economy faces economic recession on economic ascent.
National Economic Recession.
But how a micro economy related to National recession?
When the micro economic institution books low profit or less Gross Domestic products, there is a deficit appears in National treasury and entire nation suffer from economic recession.
The result of it is that , finance ministry makes a deficit budget for all departments . Finally finance department takes debt from international bank.
The finance ministry announced fiscal deficit after unable to regain the capital and interest from the revenue. The finance department finally pays the liabilities by the currency from Federal Bank, and gives birth inflation .
If Federal Bank pays 10% of currency available in the market, 10% of inflation appears in the market.
There is X amount of product and Y amount of currency in the market.
The average price of products is Y/X
If extra amount of money is Z Then new price is Y+Z/X
The price rise is Z/X The inflation is 100Z/X%
If all rich classes families was earning ‘P` amount of money : and middle classes families was earning ‘Q` amount and lower classes families was earning “R` amount of money.
The earning after 100Z/X% of inflation should be to keep affordability as earlier
( P+ ZP/X ) ( Q + QZ/X ) ( R+ RZ/X)
Or, (ZP/X + ZQ/X +ZR/X) = Z
Or, Z(P/X+Q/X+R/X) =Z
Or, P+ Q+R /X =1
Or, (P+Q+R) =X
The distribution of inflated currency.
A) The organization on rich classes increases their price i.e. profit according to the percentage of inflation. So , the affordability even in inflation stays same.
B) The middle class gets salary and thir salary grows according to inflation . So, there affordability remains almost same .
C) The carrings of wages of lower classes remains same in comparison wit inflation market and affondability goes down to 10% in inflation.
The Final conclusion
So the lack of profit leads to low GDP , low GDP leads to treasury deficit, treasury deficit leads to international debt, international debt leads to fiscal deficit , Fiscal deficit leads to inflation, Inflation leads to less sell, less sell leads to less profit.
This is how inflation and economic recession leads one after one as a recession cycle.
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National Economic Ascent
The similar way when a micro economic institution books high profit on high GDP. Treasury nourishes with less revenue and economic recession seems to appear in nations economy.
The finance department has a budget excess from revenue and excess revenue can be saved in international banks for interest . The money that take away from the market gives birth deflation ..
It a the amount of money taken away is Z
The New price of Products becomes Y-Z/X
The fall of price is Z/X
The deflation is 100Z/S%
The affondability of money comes upto 100Z/X% deflation to keep affordability same
(P- ZP/X) , ( Q- ZQ/X) , (R- RZ/X)
(ZP/X) + (QZ/X) + (RZ/X) = Z
P/X + Q/X + R/X =1
P+Q+R = R
The distribution of currency after deflation.
Most of the time distribution of money remains same as , excess revenue come from GDP of Businesses. The affondability of general buyers goes higher.
So high profit leads to high GDP , High GDP leads to treasury excess , treasury excess leads to international savings, international savings leads to deflation leads to high sell high sell leads to high profit.
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