Absolutely Right....

That is the reason people invest more than savings.... as the return or profit will be higher than in savings

My dear

expansion or growth in economy always lead towards inflation.
No2: why investors increase supply side and face decrease in the price that will hurt their profits.

dude the level of growth u r considering is dangerous as it brings up high inflation but for ur kind information the interest rate is not decreased to 2% so u need not worry abt economic growth in this case.

Yes that is the answer

look at from cost pull inflation rather than demand pull.
Interest is the price of money and money is the main factor of production and if its price decreases(interest rate) that will cause decrease in the price of commodity and hence decrease on the rate of inflation. :-)

No.1 that occurs when there is enough supply to meet the demands of people but currently our inflation is because of shortage of supply side..... there is a optimal level at which economy is needed to perform beyond that optimal level and less than that optimal level there will always be inflation.... and currently our economy is performing below to that optimal level in that case there is need of monetary loosening..... and when inflation occurs because of reaching beyond that optimal level monetary tightening is done....

No.2 currently in Pakistan investment is at halt because of the increase in cost of production..... with the low interest rates the cost of borrowing (or cost of production) will get lower and with it their returns or profits will increase rather than decreasing..... and people who get lower returns from banks consider it preferable to invest in businesses to get higher returns.

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Parindon Ki Dunya Ka Darvesh Hun Ma......, K Shaheen Banata Nahi Aashiyana

dude u are really amazing this is wat we both were explaning. economics is simple but when u really want to confuse ur self its really complicated thn.

The principles of economics are so difficult to understand that even if there is a teacher teaching to a student in front of him it will be difficult for him to understand.....

because the same principle of economics are beneficial to economy at one point and harmful at an other point..... students get confused....

so how would we be able to teach each other on this just written verbal forum.....

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Parindon Ki Dunya Ka Darvesh Hun Ma......, K Shaheen Banata Nahi Aashiyana

1st: If you want to reply to a post you don`t need to copy paste in your reply. You can use quote option at the bottom of that post.

2nd: People will not withdraw money until they have better options to invest because "Time Value of Money" is important.

3rd: Demand increases only if people have buying power and buying power is different from inflationary signs. There is a difference in buying power and having more money at hand. It all depends on value of currency how much it can buy. Supply increases if demand increases. And this also leads to competition which leads to economic growth.

And at last, you should avoid passing such comments that shows attacking and aggressive behavior. You could have said the same thing in a nice way.

Dear
first Time Value of Money is financial term rather than economic as it is sign of intelligence that discuss the issue in the terms that are under the scope of that subject.2nd our all people are not Mastets of Finance that they would make an acid test of time value of money before they withdraw from bank.
3rd Purchasing power is the healthy sign of inflation.
4th the points of economics you mention don't make any conclusion.

Thanx

Durranni is right, if the discount rate of the central bank is lowered then the inflation rate could do up "Ceteris Paribus"
but remove ceteris paribus and anything can happen. Look into the aggregate demand models under "expected inflation" "unexpected inflation" and see how aggregate supple can cause or decrease inflation, also take a look at the Philips curve and realize that if everything else remains constant then inflation and employment has an inverse relationship.

Anywhere, i applied for AD from balochistan and got 63 marks. Has anyone from balochistan gotten a call letter for the interview?