Decreased consumer spending: With less money in circulation, people have less disposable income to spend on goods and services, leading to a decrease in consumer spending.
Economic decline: A decrease in consumer spending can lead to a decline in overall economic activity as businesses see fewer sales and may have to cut back on production and hiring.
Reduced sales for businesses: With fewer consumers spending money, businesses may see a decrease in sales and revenue, making it difficult for them to remain profitable.
Layoffs of workers: If businesses are struggling to make sales, they may have to lay off workers in order to cut costs and remain financially viable.
Higher interest rates: In order to incentivize lending and borrowing during a period of low money circulation, interest rates may be increased, making it more expensive for individuals and companies to borrow money.
Decreased availability of credit: With less money available for lending, banks and other lending institutions may become more cautious about extending credit, leading to decreased availability of credit for borrowers.
Difficulty in borrowing money for individuals and companies: The combination of higher interest rates and decreased availability of credit can make it difficult for individuals and companies to borrow money, which can limit their ability to invest in their businesses and future growth.
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