As the ageing population continues to grow, the dependency ratio will continue to rise and there the ratio of workers to dependents in unbalanced. There are less people to support those that are dependent both financially, through taxes perhaps, and socially. To combat this, Governments could increase taxes so that there was more funding to support the elderly, as in pay for their residential and medical care, but this would cause disputes among taxpayers. An alternative to this would be to revoke pension and service rights or by introducing a cost, which would exclude elderly people that belonged to the proletariat. Marxist would suggest that introducing a higher tax or introducing costs for welfare support would be society’s way of extending the oppression of the proletariat, keeping them poor and preventing revolution to form a communist
On one hand, it’s simply a supply and demand issue. As wages rise, the demand for labor decreases. In other words, employers will simply stop, decrease, or slow down their hiring. Economists estimate that a ten percent increase in the minimum wage relative to the prices of goods and services decreases total employment of those affected by one or two percent. If the minimum wage increases too much, then it could even force some smaller firms out of business.
According to Keynes, why might deflation create problems for an economy? ▪ In expectation of increased spending, too many entrepreneurs would begin businesses and most would fail. ▪ The cost of repricing goods would increase costs, and therefore reduce profits, for businesses and they would cut production. ▪ People would drop out of unions because unions would become ineffective at keeping wages of members high. ▪ Consumers might expect prices to fall further and cut back consumption now.
Recession- The recession is an opposite of boom stage. The unemployment increase, most of firms are losing confidence and stops invest or expand. They may change their planning and started to survive. The customers are likely to save money then spend and the percentages of loans are high and may increase. Individuals are losing jobs and the government have to spend more money of benefits.
The Tariff placed high taxes on imports leading to a decline in international trade. The United States held many loans with European countries that began to default. Reduction in international market spending in the US, coupled with the high tariffs placed on foreign countries led to unemployment abroad and foreign countries were forced to impose their own tariffs on other countries (Kelly, n.d.). The Great Depression was perhaps most devastating to the individual and family. The Depression was recorded to have decreased the marriage rate which helped lead to a decline in the birth rate.
However, pensioners will be hit hard because the extra income they earn from saving will have dramatically reduced, making them worse off. On the other hand, savers may leave the pound for better interest rates in other countries (hot money), causing a fall in the demand for the pound. As a result the value of the pound will fall, making exports cheaper and there will be an injection of net exports. In conclusion, the impact of loose monetary policy will be beneficial to the economy because extra consumption and investment will cause AD to increase which will increase economic growth. However, it takes a long time for changes in interest rates to feed through to consumption and investment and by then the economy may have gotten worse.
When companies can produce more due to demand they are able to hire more workers, which can lower the unemployment rate. Lowering the unemployment rate will provide more income tax revenue to the government and fewer citizens taking unemployment benefits. Conversely, when exports decrease consumers pay less money for products causing domestic profits to decline and companies are unable to maintain or increase their workforce causing the unemployment rate to
The LFS limits the accuracy of the calculation of the unemployment rate because it results in the issue of “underemployment” or “underutilisation” meaning that people are able and willing to work more hours, however are unable to do so due to the lack of demand from firms for workers to work additional hours. 4) Suppose a firm decides to pay its employees “efficiency wages” that are much higher than in other comparable firms. What may be the reasons for this and
Willow Company is must reduce its inventory levels and sell inventory at a faster rate to improve the inventory turnover closer to 30 days. Due to the negative cash flow, Willow must explore the opportunity to manage its inventory levels relative to sales. The greater the inventory levels, the higher sales must be, otherwise additional storage and other holding costs will be incurred to cause further deterioration in its cash position. Cash will be invested into unsold inventory that is generating no return while remaining unsold. In addition, there will be the opportunity cost of not having cash available for more useful requirements i.e.
Furthermore, cost of living led low-income households to lose a high proportion of their income than those who are the better off people living in poverty have increased especially in households with young adults. How can one expect people living in poverty to afford decent meals? One may conclude, that recessions create and widen income gaps that cannot close when recovery strategies get employed. Moreover, recessions create a gap between the rich and the poor, thus explaining the different diet standards of the two groups. Lisa Miller states in her article ”Divided We Eat”, “As the distance between rich and poor continues to grow, the freshest, most nutritious foods have become luxury goods that only some can afford.” (Miller 190).