In which round will demand for performance products exceed the demand for size products? In round three the demand for performance products will exceed the demand for size products. 4. Explain how increasing first shift capacity can reduce per unit labor costs. Increasing first shift capacity can reduce per unit labor costs because you can produce more products in less time which reduces the labor costs.
This would increase the costs and result in the firms passing on the costs to the consumers, this would increase the prices of the goods causing negative externalities and discourage them from being bought. If there is an over production in the goods due to negative externalities, it means (s) has shifted to (s1). Which results in too many goods being supplied out to the public. The prices are also very low which makes it easier for them to buy goods, especially those with lower income. At the point the social cost [s1] is not taken into account only the private cost is.
A higher sales revenue will occur for etisalat which means the income the company receives from business activities, usually happen from sale of goods and services to customers. Etisalat will also have more opportunities to invest in upcoming projects. If the opposite occurs and etisalat has low availability and higher costs it would mean, people spend less on their goods/services which would mean there’s a low
With reference to extract one, assess the likely effect of a fall in the sterling exchange rate on the UK’s deficit in the trade of goods and services. (12 marks) A fall in the exchange rate of 25% means the pound becomes weaker, this means imports are more expensive, and exports are cheaper. As a result of this, this may mean a large increase in demand for exports and a considerable decrease in demand for imports, therefore decreasing the deficit of the balance of payments in the UK as predicted. However, if the goods we are importing and exporting are inelastic, meaning they have a less than proportional response to price, an increase in the price of imports, and a decrease in the price of exports may not have a great effect on the trade of goods and services and so therefore not improve on the deficit the UK holds. As stated in extract 1, it tells us that the goods we import are not made in the UK and so makes it impossible to replace the imports, therefore meaning that we still have to import goods, despite the high prices due to the low exchange rate of sterling.
Lower reserve requirements will result in more funds being available to loan out. This should, in turn, increase the rate of economic growth. Conversely, a higher reserve requirement will reduce the availability of funds and should slow economic growth. In this case, we need to increase our rate of economic growth in response to the recession, so I choose to lower the reserve requirement. The reason I would make this choice is to stimulate lending to businesses, reduce unemployment and increase household income so that the economy could then recover naturally.
If exports were to increase this would result in an increase in AD, as the balance of payment is a factor. The subsequent result of this increase in AD would mean an increase in supply, leading to an increase in the rate of employment, as firms are forced to take on more workers in order to fulfil demand. This means that the increase in exports would reduce specifically cyclical unemployment ( demand deficient unemployment). This is because the increase in exports would result in a increase in AD, hence curing the deficient demand. Furthermore, the cost of the formerly unemployed, i.e.
I do not agree with her as well on raising the bank reserve requirements as it can restrain lending from banks and as a result it will shrink the economy growth. After analyzing my colleagues’ recommendations, and as the president’s senior economic advisor, I recommend the following: * We should lower income taxes. This shall increase the aggregate demand as the consumer disposable income will increase, which leads to an increase in the consumer spending. If the consumer spending increases, it will bring back up the flow of business and operations which means more jobs opening in the market and low unemployment rates. * Lowering banks’ interest rates.
▪ 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.
The discount rate, in turn, directly affects the rates at which banks can lend money to its customers. When the Fed lowers the rate, it tends to have the effect of increasing consumer demand for money, since consumers are able to borrow money from banks at lower rates. The second way is by adjusting reserve ratios. The reserve ratio is the amount of cash banks most keep on hand in relation to the amount of money they loan out to consumers. When the Fed lowers the reserve ratio, it means that banks are able to loan out more money to its customers since they need to keep fewer dollars in cash reserves relative to the amount of money they lend out.
One of the problems is that it reduces the funds available for businesses to invest. People are attracted to high interest rates and the security of investing in the government which attracts them use their savings and profits to buy bonds. However, money spend on the government is one fewer dollar for investments. Crowding-out effect is caused because of loss of funds for private investment due to government borrowing. It hurts and slows down economic growth.