Monetary policy is the use of interest rates to manipulate the level of aggregate demand in the economy and loose (expansionary) monetary policy is a reduction in the interest rates. This will result in an injection of extra consumption because it is cheaper to borrow money on credit cards and therefore allowing consumers to spend more which will cause an increase in aggregate demand (AD). Additionally, extra consumption will allow shops to gain more profit preventing “business failures.” Furthermore, mortgages will be cheaper and therefore consumers feel richer and there will an extra injection of consumption. AD will also increase due to an increase in investment, causing an increase in aggregate demand from AD1 to AD2 as shown below. However,
First of all, the government would be very pleased with the increase in the increase in taxes of cigarettes since the more people pay, the more taxes the government will collect. That way, the government will have a much higher income as a result of this price rise. On the other hand, consumers will not be pleased by this price rise since the will have to pay much more to buy the product, which means less of their total income. So overall, in the short-run, the tax rise is a very good thing whereas the total income for the government increases, allowing the government to improve the entire well being of the country and provide more public goods and owners make a higher profit. However in the long-run, this price raise is not enough to make people quit smoking so since cigarettes are a demerit good, it will have a negative effect on the environment and it will increase the number of health issues from second hand smoke, not to mention the high unemployment rate and less taxes for the government.
There should also be increases in both promotion and advertising. In our analysis, we saw that it is more cost effective to not advertise and focus solely on promotion. However, if Kingsford Charcoal uses advertising, it will also lure new customers away from gas grilling and improve the overall industry for charcoal grilling, increasing the long-term value of the industry. The target market that Kingsford Charcoal is focused on is young and large families with high income. These account for approximately 80% of their total sales.
As the capital is put back into the economy the demand for supplies will go up. As the demand rises the amount of supplies will also rise increasing the need for employees and in turn putting more available spending capital in the hands of the buyers. By increasing government spending there is more money being put back into the pockets of the people. This return in turn frees up capital citizens are able to put back into goods and services increasing demand. Lowering taxes can also leave money in citizen’s pockets but it also takes away from the amount of money the government is able to use to stimulate the economy by spending.
And how? The moment there is speculation that crude will be trading higher, retailers usually increase their prices in an attempt to keep their margins intact for future purchases. Contrarily, when the price of the crude decreases, retailers are not inclined to lower rates as fast as they have raised it in order to maximize profits.” (Austin, 2011) So you can say when the price of oil is rising, the merchants have a small opportunity to gain a profit. Yet when the prices are low, they utilize this to take a advantage of the situation and delay the lowering of prices at the pump. It might be acceptable from their point of view for this reasoning.
Point #2: Tariffs protect American jobs and wages. (Points: 13) I find this position to be valid. Protective tariffs are designed to raise the retail price of imported products so that domestic goods are more competitively priced (Nickels, McHugh & McHugh, 2008, p. 76). Therefore, if products are competitively priced then the consumer will be more likely to purchase domestic products instead of imports. Since consumers will be more likely to support American vendors, this will keep the American businesses running and not force them to cut costs to compete with imports.
The two strong ideas regarding improving the improving the economy reside in the republican or democratic parties. The Republican Party suggests tax breaks towards big business, while democrats believe more taxes to the upper class can create money for programs to boost government involvement in society. The better of the two, the Republican Party allows tax breaks to the wealthy to encourage spending through out the economy by allowing more money to actually reach others in need, through a process known as trickle down economics. Money being spent from the high point on the food chain causes a chain reaction to boost every business because of increased business as a result of the tax breaks. This ultimately leads to the demise of poverty
The price for the barrels averaged at a high of $105 in the first week of May and the price of a gallon in Houston was at a decreasing $3.74 from $3.89 about three weeks ago. The test of economics relating to the cost of resources versus the product isn’t sufficient because even at the highest peak in a month for crude oil, prices were still falling per gallon which leads to the other factor, the number of sellers/ suppliers. Every under construction site lately has been the input of a new gas station. This supports the slow falling price as the market widens with new competition. In the Cypress/Katy area there have been over ten new stations
International Trade ECO 372 University of Phoenix There are many contributing factors to the stabilization and prosperity of our global market. We, the United States, are living in a time of severe trade deficit, meaning that we are importing many more goods than we are exporting. While it is nice to be able to buy foreign products at a lower price, there is risk in doing so. When we purchase foreign goods over domestic at lower prices it forces our domestic companies to sell their goods at lower prices to remain competitive. These lower prices may lend to making enough profit to sustain the current workforce.
We cannot afford and will not be approved for extra advertising without research that proves that this advertising will increase revenues more than the cost. The option of raising discounts for the Skyline Buffet and gift shop is not being recommended because it increases our loss to the 20% discount. It will decrease our revenue from the gift shop and Skyline Buffet. This 5% increase has to be offset by a 5% or higher increase in spending through the current members or new members. Further research should be done to the members to see if this change would allow them to purchase more.