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Word Count: 566
The nations 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 companys 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 companybut 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 companys 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 noalternative other than to lay off workers People out ofwork means that less consuming will take place meaning thatother businesses will hurt due to the lack of sales perhapscausing those other businesses to move up their own profitmargin in turn creating the same cycle at a faster rate With businesses under the unemployment rate would bephenomenal People would be seeking government assistancewhile the government itself is so
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