About the Economic Boom

What is the Economic Boom

As we learned in "About the Economy," the economy is based on the accumulation of money and value transactions.

Therefore, when economic activity increases (more transactions), the economy is said to be booming, and when economic activity stagnates, the economy is said to be in a slump.

And they have cycles.

Thus, the economy is a cyclical expression of how much economic activity has taken place.

The GDP (Gross Domestic Product), GNP (Gross National Product), etc. are indicators of the movement of economic activity.

These indicators give us an idea of the current economic climate of the economy.

Lifestyle changes due to changes in the economy

When the economy is booming

Lots of buying and selling takes place, and money moves around a lot → things sell → companies make money → workers get paid more → more people buy things → more and more things sell * repeat this process.

What happens when the economy is booming

When the economy is bad

Not much buying and selling of goods takes place and money moves around less → goods don't sell → company doesn't make money → workers get paid less → fewer people buy things → more and more things don't sell. *This repetition

What happens in a bad economy

Impact of economic boom or bust

Even when the economy is booming, it's not all good.

A better economy means more paychecks, but higher prices for goods make consumers less willing to buy and higher interest rates make it harder to borrow money.

On the other hand, it is not all bad when the economy is bad.

Salaries will decrease, but the price of things will drop and consumers will be more willing to buy.

It also makes it easier to borrow money because interest rates are lower.

The economy must be balanced; too much of a good thing or too little of a bad thing can be detrimental.

Therefore, the government and the Bank of Japan maintain a balance in the economy through various policies.

About Inflation and Deflation

In considering the economy and the business climate, we must also consider inflation and deflation.

Inflation, or inflation, is the continuous increase in prices and simultaneous decrease in the value of a currency.

In general, inflation is more likely to occur when the economy improves.

Deflation, or deflation, refers to the continuous decline in prices and simultaneous increase in the value of a currency.

In general, deflation is more likely to occur when the economy is in a downturn.

Deflation proceeds and becomes a chain of vicious cycles, a dangerous condition known as a deflationary spiral.

Dangerous stagflation

Stagflation is when prices continue to rise even though the economy is in recession.

In other words, prices rise while wages decrease with recession.

This makes life difficult and dangerous for the people.

Japan is said to be approaching this stagflation.

summary

We have been learning about economic boom and bust, inflation, deflation, and stagflation.

You may not have paid any attention to it in your life, but it is closely related to your life.

So, we hope that you are aware that Japan is approaching stagflation and feel a sense of crisis.

Chew on what you've learned and come up with your own answers to life's questions!