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.
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.
As the demand for one product decreases it can cause a chain reaction lowering the demand for products needed to produce the first product. This cycle will continue until the demand for manufactures goods increased and its citizen’s put more capital back into the economy. This theory is true for any reason that people stop buying goods, if the demand goes down so does the supply and the money spent on the supply. In effort to stabilize an economy that is stuck in the decreasing demand and supply cycle the government should increase spending and find ways to increase individual spending across the country. As the capital is put back into the economy the demand for supplies will go up.
The higher the ratio the more assurance exists that the retirement of current liabilities can be made. The current ratio measures the margin of safety available to cover any possible shrinkage in the value of current assets. Normally a ratio of 2 to 1 (2.0) or better is considered good. Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow the business.
Although the current assets have increased, the currently liabilities have increased as well. Target it utilizing its assets wisely by continuing to make investments and take risks. The quick ratio provides a more rigorous test of the company’s solvency position, where inventories and prepaid expenses are removed from the calculation of current assets. The quick ratio was at 0.94 for 2008 and .68 for 2009. This shows Targets improvement over time to pay its current liabilities based on available cash, short term investments, and receivables.
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.
If the interest rate is low, it will cause more funds to be available, greater expansion and increased employment. If the interest rate is high, it will cause fewer funds to be available, less expansion, and decreased employment. Fiscal policy is an important tool for managing the economy because of its ability to affect the total amount of output produced or the gross domestic product. The first impact of a fiscal expansion is to raise the demand for goods and services. This greater demand leads to increases in both output and prices.
In a highly competitive business world, on a firm’s priority list is the subject of increasing profit and reducing cost. One might than pose the question, has this put them out of business (mom and pop store)? The answer is absolutely not, but rather, they too benefit from cheaper prices as they continue to buy in bulk and continue to operate as the name suggest, convenient
The less expansion, the less inflation. However, if the economy is slowing down, interest rates will decrease. This allows banks and businesses to borrow more cheaply, which results in them being able to higher more workers and produce more goods. The monitoring of inflation is very important in the US. Inflation has many negative affects.
Moreover, the goods from the outsourcings may not be as efficient as the goods that are made within the country. The consumers would choose the goods through the brand names or the prices; however, sometimes the consumers would choose goods by where they are made. Therefore, it is very significant to know where the goods are manufactured because it will increase the satisfaction of consumers since they are very demanding on the quality of goods. In addition, as the consumption of the goods decrease, the companies will earn less revenue that decreases the investment that they will spend for outsourcings. Thus, consumer demand has a big impact on outsourcings since people do not want to spend money on the outsourcings’ goods which make the companies earn less profits; on the other hand, the outcome will reduce the spending on