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
Layoffs increase unemployment and decrease consumer spending in all sectors. Less spending means more revenue loss, perpetuating the cycle. Shoplifting affects the economy because it means the store is losing money. When stores lose money, the raise their prices. This causes people to have to pay more for products.
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,
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.
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.
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
It may also contribute to greater productivity, resulting in a lower inflation rate that would help retirement savings go further. As the proportion of retirees in the U.S. grows, one of the challenges for a shrinking workforce is to produce enough goods and services for both themselves and the retired population. More investment capital in the private sector should result in the kind of productivity gains necessary to meet that challenge. An Impact on the Market Privatization would also have a significant impact on the financial markets, especially the stock market. Younger individuals are likely to invest most of their contributions in stocks, and the increased demand would propel stock prices higher.
Another good reason to hire new people can be an expansion in overtime costs. In here, instead of paying workers for working overtime, it’s a much better option to hire new workers and spend more money on them. Through this, we can scatter workload more properly between people. Plus, these can be really expensive for a company and of course we wouldn’t want to cut the profits. New employees can be hired if the current employees working for you are resigning their holiday time just for the betterment of the company.
Surpluses can reduce taxes which saves taxpayers moneys. This gives taxpayers more savings and also puts more money into the economy in other areas. This will in turn stimulate the economy by causing banks to lend more money and lower interest rates. When there is a deficit taxpayers can feel more hardship due to increase taxes and less money being brought into households. This will cause less money to flow through the economy eventually causing lenders to reduce the amount of loans being given.
Even though raising the minimum wage may benefit people, it will hurt more. Cons to keeping minimum wage the same- Economic Stimulus: Raising the minimum wage means minimum wage workers have more money to spend which means more money goes throughout the economy. More opportunity for jobs: If these minimum wage employees are spending more, than businesses are earning more and need to hire more employees to keep up with the increased sales from the minimum wage employees who are buying more. Reduced Expense for Social Programs: People surviving at minimum