
Business and Economy
Why we don’t Print More Money
Have you ever thought why can't a country print money?
Image source: www.thepraveen.com
2. Inflation
Another factor which comes into the picture is inflation. Now, when the money supply has been doubled and the produce is limited, producers and retailers are left with only two options: (1) Increase the produce (which is rare) or (2) increase the prices of the goods. They mostly go for the latter, and thus, this phenomenon of increase in the prices of goods because of huge demands is called inflation.
So, now when the prices of the goods are doubled, the 5-million economy turns into a 10-million economy. In short, nobody gains from the extra money. Thus, printing more money does not make any difference in the economy; in fact, it may create instability in the economy.
3. Fall in currency value
Suppose the exchange rate of the country is 20 units for $1. After money supply is increased, it may go up to 25 units for $1 as everybody has more money. However, the value of the rupee is still the same, and thus, you will pay more units of currency to get $1. This weakens the value of currency.
Thus, to encourage a stable economy, increasing the supply of money is not advisable.
MORE from Business and Economy
Demonetisation: HRD Ministry orders IITs, NITs to go cashless
Demonetisation: Prakash Javadekar launches nation-wide campaign to educate students
Currency Demonetisation in India: Things you need to know
- Education Franchisee opportunity
- NCERT Solution
- CBSE Class 9 Mathematics
- NCERT Solutions for class 10 Science
- Sample Papers
- CBSE Class 9 Science
- NCERT Solutions for class 10 Maths
- Revision Notes
- CBSE Class 10 Hindi
- CBSE Class 10 English
- CBSE Class 10 English
- CBSE Class 10 Social Studies
- CBSE Class 10 Science
- CBSE Class 10 Mathematics
- Career In Science After 10
- Career In Commerce After 10
- Career In Humanities/Arts After 10
- Ncert Solutions for Class 10
- Ncert Solutions for Class 11
- Business Studies Class 12 CBSE project