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.
They could open late instead of mornings and get rid of slow peak mornings. Also, since they have a certain amount of people starting they could cut back, because they are running slow they don’t need as much people. Next, they can run more specials such as if they buy a certain amount of food or drinks they get a game for free. Lastly, they can raise prices to increase profits. These solutions can cut expense costs, and make more profit, because you aim for the peak period with specials, and with raised prices.
▪ Consumers might expect prices to fall further and cut back consumption now. 12. When interest rates rise, people are: ▪ More likely to borrow, that is, purchase a financial asset. ▪ More likely to borrow, that is, sell a financial asset. ▪ Less likely to borrow, that is, sell a financial asset.
Economic costs of inflation- Inflations economic costs would include damage to competitiveness as high inflation could cause spiralling price multiplier effect; as prices go up workers would demand higher wages so increasing business costs and another round of price rises to maintain business profits- making exports for expensive, thus reducing the demand for them causing a decrease and AD domestically. Additionally this may lead to unemployment as more costs to the firm i.e. menu costs. Change in inflation could also cause uncertainty to consumers/businesses to spend and invest as they don’t know what the future holds, this can decrease confidence in the market and potentially, in the longer term, cause and reduction in AD. Economic costs of deflation- deflation has proved to have several economic costs, the main cost is that it encourages differed expenditure where people’s expectations change and they delay spending in the hope of getting a better deal.
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.
If inflation is increasing, which means the value of money is going down, it may make more sense to invest the money in investments that are likely to increase in value. 5. Imagine that you are considering moving to a new country and looking for a job there, but you first want to make sure the country has a strong economy. Describe at least three economic factors that you would want to research as evidence of the economy's strength or weakness, and explain how each factor would affect your decision to move there. (4-6 sentences.
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.
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.
Problem: • Low revenues • Target not defined/identified correctly • Calyx needs to better understand what are the drivers behind their current customer orders • Attempt to increase the frequency of their purchases, both the higher end and the lower end • Determine if there are synergies within their other product lines that could help drive revenue • Lack of clearly defined market segment that is being targeted Incongruity between Calyx Flowers business model and the parent company’s original goal Goal: • Bottom Line: o Maintain 50% gross margin while increasing orders from current customer, and lower the cost of obtaining new customers o Increase Revenue by 20% o Gross-profit margin by 20% in the next year o Maintain gross margin while gaining incremental sales revenue from additional segments Increase the yield from current customers , recipients by 50% • Intermediate: o Increase frequency of purchases by prior customers o Reduce cost per customer on recipients and mail listings o Shift discipline of Calyx Flowers from Operational Excellence model to one that is Customer Intimate o Build the customer relationship with previous customers (women, 30-55 years old, with disposable income) o Generate more repetitive business throughout the year. Go after the customer lifetime value. o Clearly delineate and discuss Calyx Flowers service and product offering to avoid conflict with parent company’s business model o Calyx needs to work on measures to expand its market share in a mature market Impediment: • No understanding of why current customers use Calyx over other flower sources • High cost of obtaining order from new customers (low yields) and no defined target market (segments) • Prior customers are already receiving catalogs and influencing them to increase their frequency (i.e. maintaining yield) will not be easy •
However in the long run consumers will realize the effect of changes in price and they will find new alternative products like kitchen towels or sponges etc. So therefore long rung price elasticity of demand for paper towels is higher. Moreover, not like non durable goods, price elasticity of demand for durable goods like televisions are higher in the short run compared to long run. Because if price of television increases, consumers will defer buying or they will delay purchase. So demand decreases sharply.