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Economic stability is the guarantee for the stable condition of a country. Therefore, nowadays, it is economic war which actually affects the states and nations. The world has been squeezed into a global village which initiated global economic battle to get supremacy over others. However, the global economics has also opened the doors for new businesses and new businesses eagerly engaged them to snatch the business of new markets. Where this economic activity boosts the business it also created bad impact on consumer, producer and the promoter/dealer. This economic crisis not only affects the third world countries but also the advanced states like Europe debt crisis have affected the global economic environment.
The article “Europe debt crisis taking toll on manufacturing” is about the world’s largest business market. Europe has bee recognized as the largest business hub and captivating market for the world’s business. However, the current debt crises in the Europe have initiated the crisis for manufacturers to enhancing the toll which make it hard to produce the products with high duties. On the other hand the continues devolution trend in the euro also creating hard time for producer as the low currency also reduces the profits as well as increase the cost of product. This holistic situation in the Europe affected the whole world’s economy specifically China whose manufacturing sector was rapidly rising but this crisis has dipped down it radically.
Two causes are identified for this crisis one is increasing tool on the manufacturing items which is due to debt on Europe. And the second one is drastically devolution trend in the European currency. These two economic pedestals created hard time for the manufacturers and suppliers.
How does the article support the Simple Circular Flow model?
The economic term circle flow is about the flow of production and its consumption to the households. It also closely referred to the demand and supply rules of the economics. The circle flow depends on the reciprocal interchange of interests. For instance, a product needs a reward in shape of revenue, therefore, to maintain a sustainable profitability to keep the economic situation smooth. But, if a drastic situation occur like the debt crisis of Europe it would be very hard to maintain circle flow. And ultimately it will damage the overall economic activity. The devolution in the currency increase the cost of product and the additional toll also increase the cost of product. Both factors occur does not support the healthy economics, moreover, it could bring the panic situation if prolonged.
How does the article support the Law of Supply and Demand?
The drastic economic situation presented in the article also affects the law of supply and demand. The situation which is depicted in the above appended article, like devolution of currency and increasing toll on manufacturing products. It will ultimately damage the supply, therefore, if there is a high demand and low supply it will create problems for consumer. The product prices will ultimately increased by a low supply it would be a drastic situation for consumer. However, if demand would become low and supply is high it will create drastic situation for the producer. Therefore, the law of supply and demand is contra activity which can change the situation for any participant of the market.
In economics and in the global economics it is better to plan the next coming day. The radical changes in the systems and drastic devolution in economic pedestals can cause high cost damage as discussed in the above mentioned articles. Therefore, it is important to finger out the global economic indicator to keep the business safe and sound.