The right side of the equation during an economic crisis.

During an economic crisis, we must be on the right side of the equation.

First of all, what is an economic crisis?

An economic crisis is what happens when economic activity is not feasible anymore for the province or country.

So, what is an economic activity? 

Economic activity is about the supply of money and the demand for goods by the citizen, to be purchased with the money supply in the country

Goods supply that is produced by the people of a country is known as real GDP.

Real GDP multiply by price is nominal GDPs. 

When the supply of money or the velocity of money contracts, we will be in an economic crisis.

As there is insufficient money supply to fulfill the demand for goods purchased.

This leads micro economically to a drop in the price of goods as well as a drop in nominal GDP.

An economic crisis is due to the aftermath of two consecutive drops in GDPs leading to an economic recession.

Economic depression is due to prolongation of an economic recession

As the recession comes, people spend less of the money they have on goods and services in the consumer market (as they are not sure of their next paycheck), leading eventually to a contraction in the money supply in the supplier market. 

This result in business closure and eventually leading to a contraction in money supply in the labor market, making people to spend less and less leading to a more worse recession as the multiplicative factors work on the deflationary loops enhancing each other to reduce severely the money supply in consumer market, supplier market and labor market, which would then leads to bank failure as bank is the intermediaries in all these market, unless apprehended by the government before something more sinister happen.

To be on the right side of the equation, we need to have the things that people are in need during an economic crisis namely the necessity of life such as Grab, Ground, Gasoline, Gold, and Gourd.

On the other hand, we must reduce our possession of luxury goods which fetch high prices during an economic boom due to consumers' wants and vice versa during an economic recession. 

Be Bless As Always,

Dr. Lion.