Final answer:
Problems in economics related to supply issues can range from material shortages to inflation impacts on costs. In financial markets, an increase in money supply can cause a decline in interest rates. High inflation leads to unpredictable market responses and planning difficulties.
Step-by-step explanation:
The major problems regarding supplies that begin to surface in Economics include a range of issues, such as shortage of raw materials due to increased demand, decline in production efficiency, an excessive surplus leading to price drops, and an inflation-driven rise in manufacturing costs. Specifically, in the financial market, a rise in supply tends to lead to a decline in interest rates. This is because an increase in the supply of money, assuming demand remains constant, would result in the cost of borrowing money (interest rates) going down.
Other factors that can influence interest rates include a stock market collapse which decreases consumer and business confidence, rapid growth of exports, rising inflation, an increase in the natural rate of unemployment, and a rise in oil prices. High and variable inflation can cause markets to adjust toward their equilibrium prices and quantities more erratically and slowly, increasing the likelihood of surpluses and shortages which hinders long-term planning and efficiency in the economy.