Question

Situation A

Rick, your friend, runs a small manufacturing plant that produces parts for the auto industry. Rick is thinking

of expanding his operations to meet the increasing demand from car manufacturers. Hearing of your taking

this course in business economics, he asks you for advice on how to go about making the expansion

decision.

You realize that Rick needs to take a number of macroeconomic variables into consideration for the

expansion decision. You decide to research the economy in terms of GDP growth rate, interest rates, level of

unemployment, the business cycle, fiscal policy, monetary policy, international trade, and demographics.

You want to provide Rick with the most informed advice possible.

Need the following questions answered for the following but not the same answer that was given:

Briefly summarize the situation and identify the macroeconomic issue(s) to be decided from the perspective of the organization

1. Business cycles

2. Unemployment

3. Inflation

4. International—comparative advantage

5. Exchange rates trade

6. Monetary policy

7. Interest rates

8. Fiscal policy

9. Unemployment

10. Recommendations and Economic Justification

Formulate and present your recommendations for addressing the issue(s) based on the relevant

data and economic principles identified above. Justify your recommendations in terms of the

economic impact on those affected.

11. References

List the full references for at least five sources alphabetically in APA format

Answer 1

business cyle- If economy is booming, prices and output would be high.

Unemployment rate- Low unemployment rate , where workers have high bargaining power usually results in higher inflation..Inflation has direct effect on borrowers in terms of purchasing power.

monetary policy- It relates to money supply economy, intending to control money and bond market.

Interest rates- low interest rate will allow Rick to procure more loans,due to low borrowing costs and vice versa.

fiscal policy - Govt regulation through purchases and changing tax rates has direct effect on interest rates.

demographics- The population growth rate ,will influence capital labor ratio and hence productivity.

Int trade- practices such as dumping ,exchange rates fluctuation will influence interest rates.