Hey there, all you fellow members of the world and Whyville economies. What's
that you ask? What's an economy? You've probably heard of "China's Economy
High" or something like that, and wondered what that was, too.
Actually, an economy is the business of one place to another. At investorwords.com,
they define economy as "Activities related to the production and
distribution of goods and services in a particular geographic region."
Here are the things involved in a perfect and growing economy:
1. The government prints notes at a regular rate.
2. Companies create a good balance of jobs -- not too many empty places and
not too full.
3. People put their money into shops and businesses, by playing the stock market
and generally buying stuff. (You're doing this when you shop for Christmas presents!)
4. The growing businesses make more jobs, and that makes a better employment
Now I will give you an example of a bad economy:
1. The government prints too much money, which means interest rates and inflation
will go up. Those rates go up because money won't have as much value anymore
when there's too many dollar bills around. For example, if everyone had 10,000
clams, no one would care about having 200 clams anymore -- they wouldn't be
2. Because of the overprinted money, fewer companies would be able to manage
the economic ups and downs. They would have to shut down, which would mean fewer
3. More people would be poor or even homeless, and fewer people would have
money to buy things and play the stock market.
4. Thus, more companies would shut down and employment rates would drop.
As you can see, an economy is a lot like the enviroment. Everything depends
on each other.
That is why sometimes economies like the one in China goes high, because more
people are bringing and creating businesses there, and more jobs and more money
is coming to their market. That gives the government a reason not to print as
much money. That's how I understand it, anyway.