ECONOMIC IMPACTS
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Que 1.
The economic concept that applies to the budget situation is that of scarcity, which means a shortage of something. In this particular case, rent increased from the first budget to the second one. Due to this, the budget had to be adjusted since the money available could not settle it with no adjustments. Also, due to the harsh economic situation, there was a need to reduce transportation costs and utilities. This is caused by the scarcity of resources and limited cash. Each society, at every point, has to make decisions on how to use its capital. Families have to determine if to invest their money in a decent car or on a lovely holiday. Towns will either choose to put more of the budget into the fire and police defense system or the education system. Nations will determine whether to commit more resources to military defense or environmental protection. In many other cases, there will be there not enough room in the budget to do it all. When there is a shortage of commodities, the supply will decrease, and the price will rise. In the market economy, this the cost is a warning and thus a desire for a good fall (movement across the cost curve). Also, the higher price of goods creates opportunities for businesses.
Que 2.
Several expenditures changed from the first budget to the next budget. Rent expenses increased from the first budget to the next budget. This caused an increase in the overall expenditure for the whole budget. The food from the USA also increased from the first budget to the next budget. This indicates that there was a necessity for more extra food from abroad. There was a reduction in both utilities and transportation. The decrease in the expenses is to assist in cutting on the overall cost and the utilization of funds. Vulnerability in the economies can lead to revenue and profits to come up short of the estimate. If your forecasts have been frustrating, examine what could have changed in the economic climate since you planned your prediction. For instance, your company may be vulnerable to decreasing changes in consumer trust, which may cause them to delay purchases, especially on more significant budget films or on disposable purchases, such as holiday travel. Unless the business has experienced headwinds from a downturn in the economy, the adverse variances you expect will not have much to do with how well you’ve implemented the policies.
Que 3.
The economic trend that was created is that in case there is an increase in price, the expenses are reduced. This goes in hand since when prices are high, the costs need to be reduced to help in cutting down on the extra money consumption (Beaumont, 2019). This will result in savings at the end, which helps in improving the economic condition of the family’s budget. Economic conditions are among the primary drivers of stock market results. Still, inflation influences different types of investments in various ways based on the vulnerability of each bond to market risk. Market risk means that global investors can have their returns impacted to different degrees depending on the amount of volatility encountered in interest rate changes. The level of risk applied to the bond by exchange rate fluctuations depends on how quickly the relationship will last and the bond interest rate or yearly interest charge.
Que 4.
- The domestic food was cheaper than the imported food, and this helped in cutting down on expenses.
- They decided to do so that they can reduce the unnecessary costs and focus more on critical necessities.
- They decided to walk more so that the money spent on transportation can be used in the increased rent expenses.
- This was not possible since education and family care is constant and need more attention than the other costs.
Que 5.
In case there is an increase or decrease in income, this will result in a change in the economic environment. This is since there is a need to adjust to the change in commercial activities. This can proceed for over a long period, even for years when changes in the economic environment affect our daily usage and consumption. The replacement effect is an added element to be addressed when analyzing profits and company results (Varga, 2020). This happens as customers spend the money on low-priced goods compared to expensive ones. Although this, too, is usually negative for companies, if they specialize in any of the niches listed above, like department stores, they may see an improvement in their bottom line. A company may be able to make changes to the sales impact by providing incentives to its consumers to keep supporting it.
References
Beaumont, N. J., Aanesen, M., Austen, M. C., Börger, T., Clark, J. R., Cole, M., … & Wyles, K. J. (2019). Global ecological, social and economic impacts of marine plastic. Marine pollution bulletin, 142, 189-195.
Sieg, T., Schinko, T., Vogel, K., Mechler, R., Merz, B., & Kreibich, H. (2019). Integrated assessment of short-term direct and indirect economic flood impacts including uncertainty quantification. PloS one, 14(4).
Varga, A., Szerb, L., Sebestyén, T., & Szabó, N. (2020). Economic impact assessment of entrepreneurship policies with the GMR-Europe model. In The Entrepreneurial Society (pp. 39-70). Springer, Berlin, Heidelberg.