Following are some of the important problems in economy: 1. What to produce? 2. When to produce? 3. How to produce? 4. Why to produce? 5. Where to produce?
The basic problems arise when an economy is facing recession. Analysts keep on analyzing and tracing the reasons for the crisis in economy. Because of the age of globalization and increased interdependence of world economies, any effect in one economy affects the other economy. For example in the current years of world economic crisis, imports of one economy is dependent upon others. If one economy goes into crisis, the other economy will also suffer from problems. U.S. Imports many of the products from India. If a crisis occurs in U.S., Indian exports will see a decline if US decides to cut back its imports to decrease its negative account balance. Because of global outsourcing, companies outsource materials from various other regions of the world. The economy is supposed to be handled by the government but globalization has taken this control out of the single economy.
