When the demand for U.S. dollars increases, the value of the dollar will increase or appreciate (Stone 2008, pp. 685). As a result, U.S. products become more expensive for foriegners causing a reduction in exports and increasing imports. This not only effects the U.S. economy, but also affects the economies in other countries. Monetary policies influence and are influenced by international developments, including exchange rates, and based on these market conditions the U.S. government can make strategic changes to these policies to maintain the country’s economic stability (full employment, stable growth and price stability).
Consumer price and producer price in 2009 to 2012 continue to drop and raise the price for consumers was not steady. The direction and magnitude of price change in the Producer Price Index for finished goods anticipates a similar change in the Consumer Price Index for all items. When this assumed relationship is contradicted by the actual movements of the two series. The answer is that conceptual and definitional differences between the PPI and CPI—differences which are consistent with the uses of the two measures—contribute to the differences in their price movements. A primary use of the PPI is to deflate revenue streams in order to measure real growth in output.
Many customers ask the question, “What affects prices?” We learn that things happen beyond the sellers’ and buyers’ control to raise and lower prices in today’s market. This change may be due to weather conditions, new transportation options, or an increase in the demand for a product or service. Oil companies are a prime example of the affects in pricing, and adjusting the prices of gasoline as supply and demand change. The government has many ways to affect prices, by taxes and subsidies, which lead us into the next chapter. How do you fix the prices?
To begin with, raising the tax will bring in more money to the government from since demand is inelastic for cigarettes and people will keep on buying them. The extra amount of income could be used to help the well being of the country and to provide more public goods. Also, cigarettes are a demerit good, a good which is considered unhealthy or damaging in some and can be physically harmful to the consumer and other surrounding, so when price increases, demand will fall. Even if it is a small fall in demand, it is most likely to be for the young smokers to demand since they have less income than adults. If more young smokers quit, the healthier the next generations will be since smoking is a main reason behind a lot of health issues including lung
Some of these factors include the Factors on the supply-side that affect prices include natural gas production, net imports, and underground storage levels. Increases in supply tend to pull prices down, while decreases in supply tend to push prices up. Increases in prices tend to encourage production, imports and sales from storage inventories. Declining prices tend to have the opposite effects. Factors on the demand side include economic conditions, winter and summer weather, and petroleum prices.
(Cover story). Chemical Week, 170(40), 20-21. Retrieved February 18, 2009, from Academic Search Premier database. Rebecca Coons describes the obstacles to alternative energy development presented by an economic downturn coupled with low oil prices. Coy, P. (2008, September 15).
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.
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.
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.
Again in the media there are concerns about finding oil and the cost of getting it to the United States, so when the oil companies start setting up new stations it can guarantee some security in the future. Also economists might see the built as a positive shift in the economy. Oil companies foresee the area flourishing and they are coming to settle before the people get there. The factor of expectations could be hard to read because every decision made from a forecast is a risk that may change the market as a whole in the