The Rise And Fall Of The American Economy Coursework

The Rise And Fall Of The American Economy - Coursework Example In the US economy, there is a high level of unemployment and the interest rates in the economy are almost down to zero. The inflation is about 2% per year and the Gross Domestic Product (GDP) is increasing at less than 3% per year. It is necessary to raise the GDP growth to about 3% per year while keeping the rates of unemployment and inflation low in the economy. Economic depression in an economy can be controlled by the formulation of effective monetary and fiscal policies. While the Fiscal Policy is administered by the American Government, the Federal Reserve (the Central Bank of America) possesses the power to implement the monetary policies in the economy. These policies are based on a number of laws and theories; Okun’s Law and the Phillips Curve are two such important theories. The Okun’s law states that when actual output grows faster than potential output, unemployment rate in an economy, decreases and vice versa. The rate of output (GDP) growth corresponding to the stable rate of unemployment is then considered as the growth rate of the economy. Thus, it is the empirical relation between the output gap and the unemployment rate. (House of Representatives, USA, p.44) Phillips Curve shows the negative relationship between the unemployment rate and inflation rate in the economy. This implies that in order to reduce unemployment, some amount of inflation has to be tolerated or inflation can be reduced at the cost of rising inflation. (Tucker, 2011, p.453) Wages was not taken as a component of the Phillips curve as in the presence of unemployment, the bargaining power of labor is almost non-existent and thus, wages cannot be considered a key variable. However, Phillips Curve is a short-run phenomenon and there is no trade-off between inflation rate and unemployment rate in the long-run. (Mankiw, 2009, p.789) These two theories are indispensable to study monetary and fiscal policies because they show the relation between output, inflation and unemployment in an economy. A General Framework: The GDP of a country is the sum total of the values of all the goods and services produced within the geographical boundaries of a country in a particular year. Keynesian economics states that GDP can be expressed as the sum of the Consumption expenditure, the investment expenditure, the government expenditure plus exports minus imports. The equation can be expressed as: GDP = C + I + G + (X – M)†¦Ã¢â‚¬ ¦ (1) where C: Consumption expenditure of the households I: Investment expenditure G: Government expenditure X: value of exports M: value of imports Equation (1) represents the real side of the economy where the concerned variables are all real variables. Fiscal Policy: The Government can alter the level of output, consumption, emplo yment and aggregate demand in an economy, using the two main instruments of fiscal policy – taxation and government spending. Keynesian economists believe that fiscal policy has a more straightforward and immediate impact compared to monetary policy (Genovese, 2010, p.160), as it affects the real sector of the economy, rather than the monetary sector. Expansionary Fiscal Policy: Equation (1) can also be expressed in terms of personal disposable income of the household sector as: Thus, GDP = C (y – t.y) + I + G + (X – M) where y: income of the households t: income tax rate in the economy (y – t.y): disposable income of the households Therefore, GDP = C {y (1-t)} + I + G + (X – M)†¦Ã¢â‚¬ ¦ (2) When there is a high rate of unemployment in the economy, the Government can reduce the tax level in the economy i.e. the Government reduces â€Å"t† in the economy. When â€Å"t† is reduced, the consumers are required to pay less amount of t heir income as tax which increases their disposable income. The household’s consumption expenditure which is a function of their disposable income, naturally record a rise. In the equation (2), as a result of the decrease in

Strategic Perspectives Essay Example | Topics and Well Written Essays - 5750 words

Strategic Perspectives - Essay Example This particular paper fundamentally aims towards delivering a detailed analysis of the competitive forces and the various strategic issues in relation to the tablet and smart phone industry. With this concern, various aspects that include internal strategic audit of Apple and identification of the major issues regarding the external stakeholders that are currently faced by the organisation will be considered. Additionally, certain recommendations for Apple will also be depicted in the discussion. A Detailed Analysis of the Smart phone & Ta ­blet Industry The various strategic models that are fundamentally used to analyse the macro-framework of a particular industry can be identified in terms of Porter’s 5 Forces Model and Industry Life Cycle (ILC) theory. These models can be regarded as quite beneficial in obtaining an in-sight regarding the competitive forces along with the strategic issues shaping the smart phone as well as the tablet industry. The Macro-Framework Theory W ith due regards to the macro-framework theory implications, the aspect of macro environment tends to determine the various external influences that may impose a crucial effect upon the tablet and smart phone industry. The various macro environment factors in relation to the smart phone and tablet industry include the political, economic, social and technological forces which are prevalently acknowledged as PEST (Young & Pagoso, 2008). From the viewpoint of the technological forces, it has been recognised that the Integrated Circuits (IC’s) along with other electronic elements have emerged as superior, faster and cheaper as well delivering extensive opportunities towards improving the technology of the tablets along with the smart phones... This paper approves that the most significant strategic option for Apple can be identified with regards to its well structured analysis of value chain linkage that it performs while operating the business functions in a systematic and effective way. As it was mentioned earlier, Apple generally follows a well structured analysis of its value chains majorly focusing on the idea of creating new products, designing and re-designing the already developed products through the execution of its own resources and funding. It is in this context that the IT industry is very much competitive, diverse and capital intensive. In this regard, the packaging style of certain products belonging to Apple can also be regarded as one of the chief strategic options for the business organisations that might help Apple to decrease emissions during transportation and can pose valuable environmental impacts. This report makes a conclusion that Apple faces certain limitations majorly in terms of customer satisfaction and ethical measures adopted by the organisation. In order to mitigate these challenges, Apple should focus on creating differentiation business strategy along with lifestyle branding, advancing the close relationship with the suppliers, introducing innovative designs to persuade the customers and continuously investing upon the research and development in terms of technological advancements. Moreover, complying with the various requirements of the Fair Labour Organisation, greater concern towards the environmental as well as CSR conceptions and enhancing the existing valuable products of the organisation can also render significant benefits to Apple.