Hi! I don’t know much about economics and maybe didn’t know the right terms to use when searching, but I guess this wasn’t asked before 🙂 If a country produces and sells goods and services internally as well as in exports, for money, and people accumulate it/save it inside the country this money has to come from somewhere, right? But at some point, if things that can be exchanged for money keep being produced, there’s also the need to make more money to “stand in” in for the value of those things? If my currency x is worth the same as the dollar, and I make more of it, let’s say double what is currently circulating, it will be worth roughly 0,5 dollars, right? How is it that more money is put into the economy without lowering it’s value? Does it have to come from other countries?
In: Economics
you asked two different questions so I’ll answer them separately
**1-** **When a national economy grows and “makes” more money, does it necessarily mean other economies shrink?**
Yes and No when a country start producing more generally their imports decreases, and they start making money, but that could also make the country more eager to consume more because they’re richer, the US for example has a trade deficit because they consume a lot.
**2- How is it that more money is put into the economy without lowering it’s value? Does it have to come from other countries?**
Investment catalyses the production of goods and services which in turn raises the revenue which means consumption goes up internally and externally, which raises the demand for more currency and then it”s okay to raise the money supply, a good example here is the US where they can just print more money compared to other countries because the petrodollar policy means that there will always be more demand for the Us dollar.
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