Related to international trade theory, there are virtually no cost
advantages for producing goods overseas instead of domestically. When
producing goods domestically, producers often can utilize local content,
component parts and packaging materials for the final assembly, thus
reducing costs that may be imposed by tariffs associated with transport
costs. Additionally producing goods in the domestic arena results in a
lower labor and raw material cost. Local competition might also be greater
than that of the international market for products produced domestically
(CSUPOMONA, 2004). Typically manufacturers seeking out supplies know where
to purchase them on a domestic level to realize the best rates as well.
When operating on an international level, manufacturers will not have the
advantage of working within a well known market.
Producing goods domestically also provides incentives for local consumers
to spend in a domestic market, thus increasing the potential capital that
can be raised locally. By searching out goods internationally, consumers
and producers become subject to a variety of price variations, such as
those which would be associated with the international market, and also
The money supply can grow due to a variety of factors. Traditionally the
money supply is increased via creation of new banking and credit loans.
This applies to both individuals and businesses. Consumers are provided
with additional money they can use to spend in the economy. Products are
subsequently bought in markets and more money is circulated. Market price
is affected by a variety of factors and will depend on many things,
including the specific product demand by consumers intending to make
purchases, product supply provided by suppliers and competing demand for
Inflation generally rises with an increased money supply, or at least
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