123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> General >> View Article

The Concept Of Borrowing Money And Its Importance To The Economy

Profile Picture
By Author: Jack Church
Total Articles: 158
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

Many people do not realize how important the concept of borrowing money is to the economy. For most people borrowing money is just an easy way to get a new car or buy a house but for the country economy it is much more.

One of the things we keep hearing on the news is a percent number that symbolizes how fast the economy is growing. Economy growth is important to our lives. Although it sounds like yet another number professional economist use and confused us with in reality the economy growth is a good indicator to the health of the economy.

The health of the economy is important to us all. If the economy is doing well it means there are more jobs and there is more money for us to earn and of course to spend.

It is easier to understand the concept of economy growth and how it relates to borrowing money through an example of the job market. When the economy is growing there are also new jobs created and as employees in the job market we have more options to choose from that usually translate to better wages and benefits.

How are new jobs created? The answer is simple by creating new businesses. ...
... For example if a new factory opens in your city it will need to hire all kind of employees from factory floor workers to human resources and financial managers. When the economy is growing new business are created and in return they create more jobs.

How are new businesses created? Except for some rare cases all new business rely in one or another on borrowing money. Usually a group of entrepreneurs decide to start a new business for example a new computer manufacturing factory. They check the market evaluate the potential and write a business plan.

In order to build the factory they need a certain amount of money. The money is used to create the business and to run it to the point when it turns profitable. Most entrepreneurs do not have the cash to spend on such a new business. In turn they go to a bank or another borrower present their case the business plan and the idea and ask for money.

The bank makes a decision based on its evaluation of the new business risk. Usually the higher the risk the higher the interest rate that the bank would collect for the loan. At some point if the risk is too high the bank might decline the loan altogether.

If borrowing money is not available then new business are very hard to create since entrepreneurs do not have the cash to start them. If new businesses are not created the job market stays flat and the economy too. As you can see the concept of borrowing money is crucial for any economical growth. The ability to loan money allows for the creation of new businesses and for growth. Without money borrowing the economy will stay flat and eventually shrink. Jack Church writes about Internet subjects. Find more on debt

Total Views: 200Word Count: 508See All articles From Author

Add Comment

General Articles

1. Magento Developers Melbourne: Your Trusted Partner For Magento Web Development
Author: themerchantbuddy

2. How Can E-commerce App Development Help Your Business?
Author: Comfygen

3. The Best Baby Cot Mattress For Summer In Australia: Keep Your Baby Cool And Comfortable !
Author: Milari Organics

4. How Might An Amazon Fba Prep Service Center Help You Streamline Your Business?
Author: 3pshipping6

5. Reviving Artisanal Craftsmanship – Why Handmade Products Matter More Than Ever
Author: Chaitanya Kumari

6. What To Look For In A New York Labor And Employment Law Firm
Author: jewellansing792

7. 50 Years Of Long-lasting Performance
Author: Busch Vacuum Solutions

8. Optimize Healthcare Revenue Cycle: Strategies For Financial Success
Author: Albert brown

9. Offres Exclusives Pour Vos Voyages En Inde Du Nord — Économisez Jusqu’à 30% — Réservez Dès Maintenant!
Author: yatika

10. 200-hour Weekend Yoga Teacher Training Course (yttc) In Bengaluru: A Pathway To Mastery In Yoga
Author: Yogakulam Academy

11. Understanding Patient Behavior: The Importance Of Market Research In Healthcare Marketing
Author: Adomantra

12. Ensuring Safety And Privacy: The Advantages Of Close Protection Services In Dubai
Author: Shancy

13. Thermodynamic Steam Traps: A Compact Solution For Maximum Performance
Author: David John

14. Best Accounting Service In California – Mj Financials
Author: maria jeffery

15. Best Astrologer In Hosahalli
Author: Pandith Keshav Das

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: