Functioning of Markets Fluctuations are regular occurrences in the market.
These variations are known as trends, and they allow traders and investors to benefit by capturing profits through proper planning. During fluctuation, prices flow from one rate to another and this s what creates the gain or loss which affect traders, investors, and customers. The fluctuations in the market are also known as inflation. Inflation is the constant increase in prices, and it can be either from demand or supply side of the economy (Amuah, 2013).
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However, fluctuations can also occur without the presence of inflation. This article examines the factors that affect fluctuation of markets in both domestic and global level. It also analyses how fluctuation affects customers on a daily basis. Developments in the local industries affect fluctuation of domestic markets.
Through better management of the country’s resources, internal markets develop which leads to fluctuations in prices as they try to stabilize. Innovations and product development also affect the fluctuations in domestic markets due to an increase in the supply of products compared to the demand (Madura et al., 2007). However, price movements are drastic when the internal developments are unexpected. Markets both at the domestic and international level are affected by global events such as civil unrest, natural disasters, and even terrorism. Terrorism has become a global issue which has created tension leading to frequent fluctuations in the market. The social uncertainty and fear generated by terrorist attacks affected markets both directly and indirectly as investors, customers and traders were afraid and uncertain of their security.
The influences of these factors can be direct and indirect as they occur in chain reactions. An example of these influence in when a country announces military venture. Citizens who are customers will be uncertain of their security. Investors and traders dealing with military and war will benefit while the events will be detrimental to other companies.
ReferencesAmuah, H. (2013). The Factors Affecting Price of Products, Considerations for Price Decision Making in Global Markets and the Factors that Influence the Channel Structures and Strategies Available to Global Marketers. SSRN Electronic Journal.
, Tucker, A., & Wiley, M. (2007). Factors affecting returns across stock markets. Global Finance Journal, 8(1), 1-14. http://dx.doi.org/10.1016/s1044-0283(97)90002-8