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ABR 2025 26(Entrepreneurial)printed 38 · PDF 48
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Global Economy Money is something
that we use in nearly every aspect of
life. Whether we are purchasing food,
paying
for
school,
or
saving
for
something special, money is at the
center of it. Though we work with it
constantly, few of us ever take the time
to consider what ultimately makes
money worth anything. Making money
worth anything isn't fixed. It varies with
so many factors, both domestically and
internationally. Money has increased in
value over time in some nations. In
others, it has decreased to the extent
that
individuals
cannot
purchase
essential
commodities.
These
are
referred to as appreciation, when the
money's value rises, and depreciation,
when the money's value falls.
First, we must understand the structure
of the universe as we currently know it.
The universe is vast, containing billions
of galaxies filled with billions of stars,
planets, and other cosmic objects. The
observable universe, which is the part
that we can see using telescopes and
other instruments, spans 93 billion light-
years. This is simply the limit of what we
observe, but it does not necessarily
mean this is the "edge" of the universe.
As a matter of fact, the observable
universe comprises only a part of the
true extent of space.
What Gives Money Its Value?
Fundamentally, money is merely a
mechanism that individuals employ to
transfer worth. A banknote or a coin
itself is not very valuable. The reason it
is strong is that people have faith in it.
When you give somebody money, they
take it because they think they can turn
it around and use it to purchase
something else.
That is what makes money strong. For
such trust to be there, the economy of
the country has to be stable. When a
government is careful with its finances
and inflation remains low, citizens still
have confidence in their currency. But
when the nation experiences political
instability,
increasing
debt,
or
mismanagement
of
the
economy,
citizens begin to lose confidence. Such
loss of faith is one of the most significant
factors that make money lose its value.
How Does Appreciation Work?
There are various reasons why a
currency
may
appreciate.
As
the
economy
of
a
country
is
good,
everybody desires to invest there. They
may purchase its goods or services or
even keep their savings in its banks. All
of this makes its currency in demand
more, which increases its value. At
times, interest rates are increased to
curb inflation. This also draws foreign
investors, as they have the potential to
earn more by having money there. The
more demand, the higher the value of
the currency. For common people, this
can make imported products cheaper,
so things like foreign electronics or cars
become more affordable. There is a
catch, though. If the currency gets too
powerful, foreign nations may find it too
costly to purchase products from you,
which can damage domestic businesses
depending on exports.
What Causes Depreciation?
Conversely,
when
the
currency
weakens, it implies that individuals need
more of it to purchase the same product
38
Enterprise Edition