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It is the status of an individual who is looking for work but is unable to find one; it is used to gauge the wellbeing of the economy.
S-curves are used in the process of trying to trace goods or sectors and the trend they will follow. They often begin with low revenues and limited customer bases and eventually escalate until they hit an optimum point where they stagnate. This is something that economists have been using more and more of their papers (New York Times Company, 2016).
Reduced flight fees- In recent years, the tactic of airline firms lowering their flight fees has made headlines. The airline companies are focusing on travelling while full board rather than on optimization of the returns.
Global competition- international trade is taking root in the US which is raising the competition of the local companies.
Global competition and the weak economy have contributed much toward the growth as a result of emerging challenges than have been witnessed in the US economy than ever in the time of global companies like Starbucks and Amazon which are mostly used when it comes to defining the laws of concepts of Economic gravity. concerning the global competition and inflation, the international companies are today using skimming strategy whereby they are setting high prices and using marketing strategies where they reduce very little percentages during promotions and then gradually increasing the prices which means that the level at which the prices hike in a particular industry are getting to alarming levels. They are taking advantage that consumers rarely realize the continuous but slight change in prices. This has been the case even to the suppliers of the raw materials which increases the prices of the overall supply chain cost when the income levels of the consumers remain at the same point.
Finding the next S-curve and inflation
The use of the S curve to trap the progress of products of particular market reveals the effects of inflation whereby the sales reduce despite the products being assumed to be at the growth levels where there should a steady increase in the sales and not a decrease. This has been brought about by the low purchasing powers of these consumers. Companies are therefore unable to come up with S curves as the graphs no longer reveal the S curve but rather show abnormal curves.
Reduces flight charges and inflation
Inflation by its very nature has reduced the consumer’s ability to use luxurious products and services like those of using flight which are generally high in terms of their prices. They have instead adopted use of other means of transport which would help reduce their spending. The airline companies in a bit to remain in the market have to search for strategies to entice the consumers by reducing the flight levels. The airlines companies goals are no .Longer those of profit maximization but rather travelling while full board, attaining the full number of passengers per flight.
Unemployment and inflation
The inflation that is being felt is cost push inflation which even lead to even higher levels of inflation. This explained by the fact that when the prices of commodities increase and the sales revenues decrease the employers are being unable to hold high numbers of employees leading retrenchment. This is increasing the number of people who are actually unemployed.
The Gross Domestic Product is affected by inflation because of the fact that inflation reduces the overall goods produced. This implies that increase in inflation rate result to a decrease in the GDP. This can also be attributed to the fact that the US dollar losses its value according to how the prices of commodities increase.
Cost of borrowing
Inflation has a direct relationship with interest rates which determines the cost of borrowing. This means that when the inflation is high, people reduce the levels of borrowing. This means that smaller numbers of people engage in entrepreneurial activities as they cannot be able to raise the high interest demanded by banking and other financial institutions.
Consumer price index
Consumer price index is the tool that the government uses to see the level of inflation. This is because different products are affected differently by the inflation. Consumer products consumption will decrease as compared to non-current asset which tend to increase as the CPI increases. Other items such as the financial instruments lose value as their returns do not rise with the inflation. These financial instruments have a direct effect on the economy because they are what the government uses in regulation of the inflation (Cumes, 2014).
Due to inflation US is increasing its debts and borrowing so as to settle outstanding obligations it may be forced to increase the value of the currency in order to settle the overall debts. This would mean that the currency will depreciate in value. This will directly affect investors and any person who owns fixed investments as they will be paying down for those obligations by reduction of their investment with the rise in prices.
The rise in inflation may lead to unionized employees seeking an increase in their wages in a bid to increase their fixed wages which will mean an increase in the cost of labour per industry and in effect a reduction in the profit generated (Cumes, 2014).
As people speculate so as to take advantage of the current inflation, they often channel their money to other places which are of higher risk. This in consequence brings about structural unemployment.
Inflation affects the economy negatively when it is very high which is in terms of lower production levels, lower sales and even unemployment.
It can also be a blessing in disguise when controlled. This means that effective monetary policies need to be put in place to keep the inflation in check which ensures that the purchasing power of consumers is not affected adversely.
I totally agree with the article. Unemployment, finding the S-curve, rising flight charges and global competition have been well analysed in the article.
Cumes, J. W. (2014). Inflation! Elsevier Science.
Hudson, J. (2016). Inflation. Taylor and Francis.
New York Times Company. (2016). The New York times.
Annenberg Learner (Firm), & Films Media Group, (2016). Inflation.
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