SUPPLY AND DEMAND-ECONOMICS

Global Market Astro briefs on the supply and demand in economics to the blog readers. Supply and demand are one of the most essential conceptions in economics and acts the primary factors of market economy.

What is Demand : 

The demand in an economic may be described as a consumer’s desire and willingness to buy, paying a price for a specific good or service. Apart from other constraints, the price of a good or service rises as its demand increases and vice versa.

Law of Demand :

The law of demand states that, if all other economic factors remain equal, the higher the price of a good, the less number of people will demand that good. In other words, if the price is higher, the quantity demanded becomes fewer. The amount of a good that buyers purchase at a higher price is less because as the price of a good rises, so does the opportunity cost of buying that good. As a result, people will naturally avoid buying a product that will force them to skip the consumption of something else they value more. The chart below shows that the curve is a downward slope.

A, B and C are points on the demand curve. Each point on the curve reflects a direct correlation between quantities demanded (Q) and price (P). So, at point A, the quantity demanded will be Q1 and the price will be P1, and so on. The demand relationship curve illustrates the negative relationship between price and quantity demanded. The higher the price of a good the lower the quantity demanded (A), and the lower the price, the more the good will be in demand (C).

What is 'Supply’

Supply is a fundamental economic concept that refers to the total amount of a specific good or service that is available to consumers. Supply can relate to the amount available at a particular price or the amount available across a range of prices if displayed on a graph. This relates closely to the demand for a good or service at a particular price; all else being equal, the supply provided by producers will rise if the price rises since all firms look to maximize profits.

Law of Supply

The law of supply establishes the quantities that will be sold at a certain price. However unlike the law of demand, the supply relationship shows an upward slope. This means, the higher the price the higher the quantity supplied. Producers supply more at a higher price because selling a large quantity at higher price increases revenue.

A, B and C are points on the supply curve. Each point on the curve reflects a direct correlation between quantities supplied (Q) and price (P). At point B, the quantity supplied will be Q2 and the price will be P2, and so on.

Source : https://www.globalmarketastro.com/blog/demand-supply-market-theories/

Stock Market Basics – What is bear and bull market?

In this blog Global Market Astro explains its blog readers the terms used to describe the prevailing market conditions. The bull market and the bear market conditions are explained using simple terms.

BEAR MARKET

It is a market condition in which the security prices are facing a downfall. It is generally caused due to the pessimistic sentiment about the market among the traders and investors. The investors generally tend to anticipate losses and hence the selling of securities continues, thus the pessimistic sentiment grows causing further downfall in the market. The security prices hit the lower during the bearish market conditions. Some investors use this opportunity for buying the securities at a low price, expecting an increase of the price in the near future.

BULL MARKET

This is a market condition in which the security prices are rising and are expected to rise further. The bull markets are generally characterized by optimism among investors and traders, positive expectations of the market that the security prices would increase.  The investors generally tend to anticipate profits as the security prices hit the maximum in a bullish market condition.

NAME CAUSE OF BEAR AND BULL MARKETS

The use of "bull" and "bear" terms for referring to the markets comes from the way these animals attack their opponents. Generally a bull stabs its horns up into the air, thus denoting an upward rise.While a bear swipes its paws down, denoting a downside fall. These actions are metaphors for the movement of a market. If the trend is up, it's a bull market and if the trend is down, it's a bear market.

Source : https://www.globalmarketastro.com/blog/bearish-and-bullish-market-conditions-explained/

Exchange Rate – Currency appreciation and depreciation

n this blog Global Market Astro has tried to explain its blog readers regarding currency appreciation and depreciation in simple terms.

Currency Appreciation

Currency Appreciation may be defined as an increase in the value of one currency with respect to another currency. Appreciation of one currency against another currency may be due to various reasons, including the country’s current account and capital inflows. Usually a forex trader trades a currency pair with the hope of base currency’s appreciation against the counter currency.

Currency traders have to take into account currency appreciation when making a trade, since a long-term currency option contract might see its value decline if the value of the underlying currency adjusts. Moreover, when a currency appreciates it becomes more expensive to buy that country’s exports. This can cause a narrowing in the economy, which can have added impact in the value of the currency.

Currency Depreciation

Currency Depreciation may be defined as a decrease in the level of a currency in a floating exchange rate system due to market forces. Currency depreciation can occur due to many numbers of reasons such as economic fundamentals, interest rate differentials, political instability, and risk aversion among investors and so on.

Countries with weak economic fundamentals such as prolonged current account deficits and high rates of inflation normally have depreciating currencies. Currency depreciation, if orderly and measured, improves a country’s export competitiveness and may improve its trade deficit over time. But sudden and large currency depreciation may panic foreign investors who fear the currency may fall further, and lead to them withdrawing their portfolio investments out of the country, putting added downward pressure on the currency.

Easy monetary policy and high inflation are two of the main reasons of currency depreciation. In a low interest-rate environment, hundreds of billions of dollars chase the highest yield. Expected interest rate differentials can initiate a bout of currency depreciation.Currency depreciation can also be caused due to inflation. This is because the higher input costs for export products made in a high-inflation country will make its exports noncompetitive in global markets, which will increase the trade deficit and cause the currency to depreciate.

Source:https://www.globalmarketastro.com/blog/exchange-rate-currency-appreciation-and-depreciation/