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Distinguish Between Cost Push and Demand Pull Inflation Essays

Distinguish Between Cost Push and Demand Pull Inflation Essays Distinguish Between Cost Push and Demand Pull Inflation Paper Distinguish Between Cost Push and Demand Pull Inflation Paper Can you remember how much you paid for the same items you buy now, two years ago? This increase in the general price level of goods and services in an economy is inflation, measured by the Consumer Price Index and the Producer Price Index; Commonly referred to as Inflation. There are however, different types of inflations, each affected by different factors. Aggregate supply is the total volume of goods and services produced by an economy at a given price level. When there is a decrease in the ggregate supply of goods and services stemming from an increase in the cost of production, we have cost-push inflation. Cost-push inflation basically means that prices have been pushed up by increases in costs of any of the four factors of production (labor, capital, land or enterprise) when companies are already running at full production capacity. With higher production costs and productivity maximized, companies cannot maintain profit margins by producing the same amounts of goods and services. As a result, the increased costs are passed on to consumers, causing a ise in the general price level (inflation). A company may need to increases wages if laborers demand higher salaries (due to increasing prices and thus cost of living) or if labor becomes more specialized. If the cost of labor, a factor of production, increases, the company has to allocate more resources to pay for the creation of its goods or services. To continue to maintain (or increase) profit margins, the company passes the increased costs of production on to the consumer, making retail prices higher. Along with increasing sales, increasing prices is a way for companies to onstantly increase their bottom lines and essentially grow. Another factor that can cause increases in production costs is a rise in the price of raw materials. This could occur because of scarcity of raw materials, an increase in the cost of labor and/or an increase in the cost of importing raw materials and labor (if the they are overseas), which is caused by a depreciation in their home currency. The government may also increase taxes to cover higher fuel and energy costs, forcing companies to allocate more resources to paying taxes. The graph on the left shows the level of output that an be achieved at each price level. As production costs increase, aggregate supply decreases from ASI to AS2 (given production is at full capacity), causing an increase in the price level from Pl to P2. The motivation behind this increase is that, for companies to maintain (or increase) profit margins, they will need to raise the retail price paid by consumers, thereby causing inflation. Demand Pull Inflation, however, occurs when there is an increase in aggregate demand, categorized by the four sections of the macro economy: households, usinesses, governments and foreign buyers. When these four sectors simultaneously want to purchase more output than the economy can produce, they compete to purchase limited amounts of goods and services. Buyers, in essence, bid prices up, again, causing inflation. This excessive demand, also referred to as too increase in aggregate demand that causes demand-pull inflation can be the result of various economic dynamics. For example, an increase in government purchases can increase aggregate demand, thus pulling up prices. Another factor can be the epreciation of local exchange rates, which raises the price of imports and, for foreigners, reduces the price of exports. As a result, the purchasing of imports decreases while the buying of exports by foreigners increases, thereby raising the overall level of aggregate demand (we are assuming aggregate supply cannot keep up with aggregate demand as a result of full employment in the economy). Rapid overseas growth can also ignite an increase in demand as more exports are consumed by foreigners. Finally, if government reduces taxes, households are left ith more disposable income in their pockets. This in turn leads to increased consumer spending, thus increasing aggregate demand and eventually causing demand-pull inflation. The results of reduced taxes can lead also to growing consumer confidence in the local economy, which further increases aggregate demand. When aggregate demand increases without a change in aggregate supply, the quantity supplied will increase. If aggregate demand increases from ADI to AD2, in the short run, this will not shift aggregate supply, but cause a change in the uantity supplied as represented by a movement along the AS curve. The reasoning behind this lack of shift in aggregate supply is that aggregate demand tends to react faster to changes in economic conditions than aggregate supply. As companies increase production due to increased demand, the cost to produce each additional output increases, as represented by the change from Pl to P2. This is because companies would need to pay workers more money (e. g. overtime) and/or invest in additional equipment to keep up with demand, thereby increasing the cost of production.

Dorothy Day essays

Dorothy Day essays Dorothy Day was born in Brooklyn, New York on November 8,1897. After the earthquake in 1906, her family moved to Chicagos south side. Into a place not as nice as the one in New York because her father, John, was out of work. When John Day got a new job as a sports editor for the Chicago newspaper, they moved to the north side in a better home. Dorothy won a scholarship to the University of Illinois in the fall of 1914 but was a reluctant scholar. Dropping out of college 2 years later, she moves to New York and became a reporter. She next worked for The Masses, a magazine that opposed the involvement in the European war. In November of 1917, Day went to prison for being one of forty women in front of the white house protesting womens exclusion from the electorate. The women were roughly handled and responded with a hunger strike, finally they were freed by presidential order. In 1924, Dorothy Day began a four-year common-law marriage with Forster Bathroom, an English botanist. Forster found it hard to believe in god in a world of such cruelty. Together, they had a baby girl, born on March 3, 1927, named Tamar Theresa Day. She thought the birth of her child was a miracle. After Tamars baptism, there was a permanent break with Batterham. Dorothy Day started The Catholic worker, a newspaper that publicized Catholic social teaching and promoted steps to bring about the peaceful transformation of society. The first copies were handed out on May 1. She decided to sell the paper for one penny so that anyone could afford to buy it. Homeless people began to come to Days home after reading the magazine. She began to put her principles into practice, her apartment was the seed of many houses of hospitality to come. By the wintertime, an apartment was rented with space for ten women, soon after a place was also available for men. The Catholic Worker became a national movement. By 1936 there were 33 Catho ...

Outline and discuss the evolution of CSR Essay Example | Topics and Well Written Essays - 2500 words

Outline and discuss the evolution of CSR - Essay Example This paper explores the concept of Corporate Social Responsibility, tracing its evolution and how businesses implement it as well as how it affects them. II. Definitions of CSR Corporate Social Responsibility (CSR) may be perceived in a variety of ways depending on one’s perspective. One commonly accepted definition is as follows: â€Å"The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of local community and society at large.† - World Business Council for Sustainable Development, 2005 Another definition created by the European Commission (2003) is: â€Å"Responsible business practices that support the three principles of sustainable development: economic growth and prosperity, social cohesion and equity and environmental integrity and protection.† (p.5) III. Principles of CSR The United Nations is the main promoter of CSR. On December 31, 1999, then Secretary General Kofi Annan declared its principles at the World Economic Forum in Davos (Madrakhimova, 2013): 1. Human Rights – Commercial organizations should maintain support and respect for internationally recognized human rights in the creation of their standards of work. The rights to bargain collectively of workers must be upheld. Forced labour and child labour should be eliminated along with any form of discrimination in the workplace. 2. Ecology – Corporations should be conscious of the prevention of environmental problems and diligent in carrying out a more responsible attitude towards the care of the environment. They need to promote technologies and know-how in the reduction of negative impacts of some systems on the environment. 3. Anti-corruption – Corruption in all forms which include extortion, bribery and red tape must be prevented. 4. Legal responsibility – Legal frameworks bound in the territories where the businesses st and must be enforced. 5. Global responsibility – Compliance with international standards of social responsibility 6. Environmental Responsibility – collaboration of businesses and society in the rational use of natural resources, effective management of the environment and public health from the production of environmentally-friendly products. 7. Cultural and ethical responsibility – Compliance with relevant territorial cultural and ethical customs and traditions as well as moral norms followed by employees and other stakeholders. 8. Philantropic responsibility – support and development of the society and of individual marginal groups through voluntary participation in social programs and social and financial investment. IV. Benefits of CSR In a study of Lithuanian development of CSR practices, Spukiene & Urbonien (2011) report the following internal benefits in adopting CSR practices have been recognized: business sustainability; competitive advantage; e asier compliance with legislation; employee loyalty; attraction and retention of qualified employees; increase in productivity, quality and sales; financial improvement and access to capital; and reduction of costs. External benefits from adopting CSR practices were acknowledged as well: improved image and reputation; preservation of the environment; intangible benefits; contribution to Lithuania?s sustainable development; increased visibility; promotion of solidarity in the community; clients? loyalty; and

Costs Essay Example | Topics and Well Written Essays - 1500 words

Costs - Essay Example As mentioned in the definition, the organization can increase its factors of production to achieve higher production levels and the state of technology is the only constraint. So it means that all inputs are variable. Hence, in the long run when the inputs are increased, the output may: To inputs the average total cost of producing that output will fall. The firm's costs will rise less than the output of goods. This is called as the economies of scale as represented in the following diagram: The long run curve represented above includes short run periods as the firm expands. The LRATC curve is a track of all the SRATC curves as the firm grows. Initially, the short run average costs are at the lowest in SRAC1. As the firm expands, its average costs fall to the bottom of the U shaped curve and then begins to climb because of the diminishing returns. The firm then moves its production to the next level and the cost move to the next short run situation shown as SRAC2. In the long run the average cost is represented by the black line tangenting all the short run average cost curves. The whole LRATC is composed of infinite number of single points from SRAC curves. The LRATC curve is the boundary between unit cost levels that are attainable by the firm and unit cost levels that are unattainable. ... When the long run until costs are falling as the outputs increases, the firm is experiencing increasing returns to scale and thus less long run average costs. If the firm is experiencing average returns to scale then the average long run costs are same and if the firm is experiencing diminishing returns to scale then the long run average costs are increasing. Long run marginal cost Marginal cost is defined as the cost associated with producing one extra unit assuming that the extra unit produced will cause increase in production capacity. The long run marginal cost curve resembles the short run marginal cost curve as it is also U shaped. The U shape of the LRMC can be attributed to increasing and decreasing marginal returns. The calculation of cost and revenue of one extra unit is very crucial in the long run as it is essential to make the capacity increase decision. If the last unit produced gives more revenue than the cost to produce that unit, the firm should expand it s capacity. Marginal cost will increase as the firm expands due to the Law of diminishing returns. The firm should keep expanding as long as the MR > MC. "The term LRMC is used to signify the cost effect of a change which involves some alteration in the amount or timing of future investment. SRMC, on the other hand takes capacity as given, so relates only to changes in operating costs." (Turve y,11). The SRMC rises due to the capacity constraints and then fall after there is a significant increase ion the capacity expansion. Hence, in the long run the marginal cost curve is U shaped. The following diagram shows the increase and decreases of the marginal costs before and after expansion. Kinked demand curve In a non collusive

Managing Through People Assignment Example | Topics and Well Written Essays - 2000 words

Managing Through People - Assignment Example ions, including, eg, career development, training, organization development, etc.†1 Human resource Management (HRM) is the management activity of the employees of an organization where as the Human Resource Development (HRD) is a more general term in which apart from the management function the developments of the organization and the employees (internal and external) through different types of training activities are also the functions of an HRD department. The globalized current business environment has made the task complicated for the HR department. Most of the companies are now establishing their manufacturing units in overseas countries in order to exploit the overseas markets. Some employees need to be sent to the overseas countries in order to set up the business there. The HR managers need to train such employees in accordance with the needs of the target country. The difference in culture, language, environment all must be addressed by the HR managers while formulating the training procedures. Microsoft is believed to be one of the biggest software companies in the world. In fact it controls the majority of the world’s software market with their monopoly. Even other companies like Intel were forced to make microprocessor chips suitable for the Microsoft’s Windows operating system because of their monopoly. Microsoft did this by creating a series of operating systems (DOS, then Windows), and by defining the kind of machine that could run their OSs.† (Why is Microsoft a Monopoly?) Microsoft is lead by its founder Bill Gates. It is actually the great leader ship Bill Gates, shaped Microsoft into such a big monopolistic firm in the world. â€Å"Leadership is setting a new direction or vision for a group that they follow, ie: a leader is the spearhead for that new direction. Management controls or directs people/resources in a group according to principles or values that have already been established.†2 The leader always concentrated on setting the

Social Marketing-Does the kindly reminder on the package of cigarette Research Proposal

Social Marketing-Does the kindly reminder on the package of cigarette can affect the customer buying cigarette - Research Proposal Example 7). There are eight principles of social marketing namely â€Å"customer orientation, insight, segmentation, behavioural goals, exchange, competition, methods mix, and [social marketing] is theory based† (Janssen et al., 2013). Stead et al (2007) found that social marketing can be used to develop an effective framework directed at interventions in behavioral change and can serve as a toolkit that can help organizations change health behaviors. One of the basic principles of social marketing is focus on the audience. Marketing mix cannot be useful until each of its four P’s are designed with the preferences, attitudes, behaviors, and characteristics of the target audience in mind. An example of the significance of perspective of the audience during the intersection of environmental and cultural contexts is provided by Romer et al (2009) who have examined the mass media’s contribution in a campaign for prevention of HIV in sexually active high-risk African American adolescents while addressing misconceptions regarding the use of contraception. The strategy of segmentation, like many marketing interventions, particularly addresses the social desires and norms of cultural subgroup. Behavioral change interventions can be classified according to a plethora of frameworks, though none can be considered as conceptually coherent and comprehensive (Michie, Stralen, and West, 2011). For example, the UK’s Institute of Government’s MINDSPACE is a very influential report meant to serve as a checklist to guide policymakers with the most important behavioral influences (Institute for Government, 2010). MINDSPACE is the acronym that represents the initial letters of these influences i.e. â€Å"messenger, incentives, norms, defaults, salience, priming, affect, commitment, and ego† (Michie, Stralen, and West, 2011). However, all important types of intervention are not