Ask Leo : can cash shortage Leeds to decline in business activities?

What is cash ?

In a lay man understanding cash is said to be a tool for exchange to satisfy human wants .
Cash can also be defined as a legal tender currency or coins that can be used to exchange goods, debt, or services in a particular business environment

What is shortage in business ?

Shortage is a business condition that is not encouraging success or profit maximization in a business environment and this condition could Leed to an end of a business at any point in time and it could affect the country business activities,
shortage can also be defined as a condition where the quantity demanded is greater than the quantity supplied at the market price.

There are three main causes of shortage,

• Increase in demand
• decrease in supply
• government intervention

What is cash shortage?

an inability of individuals or firms to obtain desired nominal balances of cash
A temporary cash flow problems can happen for a variety of reasons this include customers being unable to pay due to insolvency and sometimes a situation in a particular country could Leed to cash shortage just like the cashless policy that was just introduce in Nigeria also cash hording can also be a determinant factor that can Leed to cash shortage in a business environment however a cash shortage is when a company has too little cash available to cover its running costs.

Can a cash shortage Leeds to a decline in business activities ?

Yes cash shortage can Leed to a decline in business activities because when a customer is unable to get what he or she desires due to low cash the demand for such good or products will be reduced drastically and such products may depreciate in value or Leeds to low patronage and this may affect such business
The most severe impacts of cash shortages were seen with regards to output and new orders, which both fell substantially as customers were often unable to secure the funds to commit to spending,

Economic shortage

Economic shortage is a situation where the demand does not meet the supply of goods and services thus creating a shortage.
the demand for goods or services will be high but the supply does not match the level of demand which Leeds or result to a price rise.

What happen if there is shortage of money?

a shortage of money increases the interest rate in a situation where by there is a shortage of money the price of money increases and this Leeds to reduction of demand
And it may also reduces the demand for consumption and investment,
As a result of this the economic growth 💹 📉 will be slow down .
Money or cash circulation play a very important role in the economy aside from being a medium of exchange it also facilitate transactions between different countries or person's Without money all transactions would have to be conducted by barter, which involves direct exchange of one good or service for another Luke it's happening now in Nigeria ,

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