According to Robert E. Scott and Christian Weller, “further increases in real short - term interest rates herald a slowdown.” Further evidence that suggests a recession was on the horizon was information released from the National Bureau of Economic Research that states, “A peak marks the end of an expansion and the beginning of a recession.”(The Business Cycle Peak, March 2001.) During an expansion, however the economy is experiencing normalcy, and during this period the economy is between a trough and peak. The National Bureau of Economic Research, however, defines a recession as, “ a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income and the wholesale-retail trade.” (the Business Cycle Peak.) Therefore, when a peak date was determined in March 2001 it marked the end of an expansion that began in March 1991, and hence the beginning of a recession. This marked the end of the longest economic expansion that lasted ten years of rising incomes and employment.
M2 In these criteria I will be talking about Carphone phone warehouse and Ealing PCT, I will be describing affects in time of growth and recession. I will be also talking about their similarities and differences during recession and growth; I shall explain which business will be most affected by the recession and growth. I will be pointing out the different economic factors that affect Ealing PCT. Economic Environment In times of growth the government is going to receive more money, as a result because Ealing PCT come under the public sector they will be getting more money from the government, by this money Ealing PCT can invest other sector of the business. Because the Ealing PCT has increased their fund which will mean that more wards will be open, because more wards are open this will help with the aim of decreasing the waiting time in the A&E wards to less than 1 hour also more room and beds will be provided by the Ealing PCT for the patients.
Findings The business cycle is characterised by four main phases: Boom: This means when there are high levels of consumer spending, business confidence, profits and investment. Also Prices Unemployment tends to be low as growth in the economy creates new jobs. Recession: This means when there are falling levels of consumer spending and confidence meaning lower profits for businesses – which start to cut back on investment. Slump / depression: This means when there is a prolonged period of
The Effects of Outsourcing on the Economy In recent years, outsourcing has become an increasingly popular alternative for some of the largest corporations in North America, who are looking for inexpensive ways of lowering overall costs. Outsourcing, which is the relocation of jobs to other foreign countries, has become a controversial new way of doing business. In considering the pros and cons of outsourcing, we have to ask some key questions: Who is benefiting for outsourcing? What types of jobs are being outsourced? What effect does outsourcing have on Americans?
Banks have a reserve requirement, which is set by the fed. A reserve requirement is the minimum percentage of a bank’s total reserves that they are required to keep, for security reasons. (Schiller) The fed can change the reserve requirement to allow a bank to loan more/less money, which is used to control the economy. Many critics use this to determine that annual deficit spending has a negative impact on the economic stability of our country. The fed has to set a lower reserve requirement, which allows banks to loan out more money, which generates more interest, which could lead to periods of inflation and could have worse consequences if the government does not react quickly enough.
More things can affect how the ECB reacts when I comes to inflation and mostly targets a broader price index that includes things that doesn’t bother the FEDs as much, such as the Libya-related oil spike in 2011. (Bagus 2011) When the 2008 financial crisis was at its worst, the FED began an emergency lending program to ensure money continue to flow through the economy. $3.3 trillion was loaned to U.S. banks, European Banks, General Electric, McDonald’s and anyone and everyone who needed help. They also boosted the economy by buying more than $2 trillion of mortgage-backed securities and other bonds. (Hanna 2011) The FED generally acts as a lender at the last resort to help give the economy a need boost.
Although it not always brings surprise to the fasting changing business world like new technology, it is crucial not only to the GDP and also important to everybody’s daily life by always being with consumers. It is worth to look into the retail industry in different aspects when facing the big economic depression and think of the possible future in the fasting changing business environment. The retail industry of the United States plays a leading role in the worldwide since the retailing companies that are based in the U.S. dominate on the global retailing stage and at the same time, the retail industry outweighs other industries within the States. According to the latest annual
Inflation affects how much UK branches have to raise or reduce the amount of pay each employee gets. This may lead to the company needed to let go of some employees. Indian branches also would need to alter pay, but wages in India can dramatically differ year to year depending on money flow. The recession decreases the companies in the UK wanting to lend money. Credit scores effect this drastically, if you have a bad credit score it is unlikely for UK Barclays to give you a loan or mortgage.
WorldCom fraud Expense capitalization and Accrual expenses audit Description of audited area The Company’s problems started with the dot-com bubble burst and following reduced demand on infrastructure when it had the vast oversupply in telecommunications capacity. WorldCom increased its net income and assets by transferring part of its current expenses to capital account. By doing this, the expenses were understated and capitalized costs were treated as an investment. The Company managed to spread its expenses into the future and showed much higher net income in order to boost its financial performance. During that time the Company experienced troubles and the revenue has fallen while debt taken on to finance mergers and infrastructure investment remained the same.
This caused a ‘Recessionary gap’ where a fall in aggregate demand took an economy from above its potential output to below its potential output. From post-World War2 Keynesians Economics became widely accepted where it became the standard economic model for USA between the 1940s-1970s and was seen to be globally effective. However, the 1970s saw the demise of the Keynesian model where we saw wide spread inflation and oil prices started to rise. The idea of the Phillips curve relationship then seemed to break down as a result. It broke down due to the relationship work beyond the short run.