When dealing with certain aspects of the economy, such as inflation and employment, there is a great chance that a change in one aspect will directly affect the others. When the prices of U.S products rise, it has a tremendous impact t on our position in the global marketplace. Other countries will look for different places to buy their goods at a cheaper cost. This alone can lead to increased unemployment due to a lower demand for domestically produced goods. When the government attempts to interfere with the economy they are dealing with “tradeoffs”. They may be able to improve one aspect, but only to cause another (such as unemployment) to increase.
If you reduce inflation, you are essentially slowing down the economy and taking away people’s ability to buy so many products or services. When consumers begin to spend less, this can lead to workers producing fewer goods and selling fewer products. Jobs may have to be cut in order to meet the current demand.
How can the circular flow model be used? It can be used to show the general flow of the economy. The flow is generally represented by key points and arrows. Human wants/needs are essentially unlimited, so this allows the chart to continue and start over once it reaches the end.
What information does it show? It shows economic information such as income/payments, goods and services, and factors of production. It displays the flow of goods and services through the economy, and how these go from producer to consumer. It also shows the general flow of cash.
What are the limitations of the model? These charts are generally very basic and only give an outline. If the models became too complex, it would be difficult to read and understand. It also does not incorporate all factors of the economy, only including the most important aspects.
Price and Demand
Change in quantity demanded refers to the response of consumers to changes in the PRICES of commodities. It is essentially the number of goods a consumer is willing to buy. It is a movement along a demand curve.
Change in demand refers to an increase or decrease in demand brought about by a change in the conditions of non-price determinants. It involves a shift in the demand curve, either to the left or right.
There are many factors that can cause each to change. Price is one of the biggest factors. If a price is extremely low, consumers tend to buy more of that product, and in bigger quantities. Availability, quality, consumer income, number of buyers, taste, and expectations are also contributing factors.
Financial analysis can be a great tool to help you make better financial decisions in the future. You can use financial analysis to get an overall summary of your finances and help you identify strengths and weaknesses. If you are spending too much in one area, these tools will help show that. They can help predict future trends and help you personally set a budget for your needs.
These are a great way to measure employee performance. You can help determine the number of sales per person in a given time period. They also give a good overview of company performance. A balance sheet can list many important aspects such as liabilities, assets, and equity. These tools are a great way to determine how well the company is performing. You can also break it down into individual employee performance. Whatever suits the company’s needs.