Changes to the Economy

525 Words2 Pages

Unexpected or unanticipated change is an alteration that catches people by surprise such that they have already made decisions that did not take the event into account. The economy is quite dynamic and numerous economic changes take place unpredictably. Economics endeavors to explain the manner in which people react and markets adjust to change. An unexpected 3 percent fall in the price level in the goods and services market will lead to similar effects as when the economy is experiencing deflationary shocks. People tend to increase their savings and cut down on their expenditure in anticipation of losing their sources of income. The stock market will also be characterized by tumultuous instability that will be an indicator of falling values of companies’ shares.
To prevent economic collapse, government will implement various policies including economic structural changes. This in turn influences investment decisions in the economy with investors targeting less risky and more conservative investment vehicles. This includes targeting tangible investments such as real estate or short-t...

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