Known also as Black Tuesday, October 29th left stockholders shattered with recorded losses reaching $40 billion dollars (Kelly, n.d.). Many banks and financial institutions began collapsing which led to irretrievable, uninsured deposits and savings. Fearing further loss, people began spending less which led to a decrease in production and an increase in unemployment. As companies began to fail, the government devised the Smoot-Hawley Tariff in order to protect American businesses. The Tariff placed high taxes on imports leading to a decline in international trade.
It is one of the highest taxed holiday destinations in whole of Europe (BHA, 2012). Thus with the rise in tax, business like the local shops, the restaurants and the travel agencies are said to be affected. Economic Factors During the past few years the tourism sector have faced hard times due to challenging economic times and have largely impacted the global travel market but however there are signs of recovery within the consumers. The travel and the leisure sector were impacted mainly due to the consumer’s disposable income, unemployment rate, fluctuation in the rate of currency and the oil price. All these drives have hugely impacted the travel and leisure industry.
Inflation is also a very strong indication of economic growth as it represents the growth of the prices of goods and services. The reason inflation is related to economic strength is because the prices of goods and services determine the spending of consumers and all other spending in the country. As discussed earlier, the economy had a
Questions 1. What are the pressures that lead executives and managers to cook the books? The main pressures were coming from the economic recession and the aftermath of dot-com bubble collapse which then causes the industry conditions began to deteriorate in 2000. The competition among existing company and the new entrants were becoming more heightened; the company became overcapacity and the demand for telecommunication services reduced significantly. And the pressure to maintain a 42% of expense-to-revenue ratio (E/R ratio) had also becoming one of the forces that lead the executives and the manager to cook the books in order to make it looked good at the public’s eyes.
The UK’s current level of unemployment is at 2.62 million (BBC News Business, 16th Nov 2011) which has remained high since the global downturn at the end of 2008. In the classical view, unemployment rates are associated with the real wage rate. Unemployment occurs because wages are too high and above the market clearing level. This causes an excess of supply. Trade unions exert pressure on firms to raise real wages which puts the real wage level above the market clearing level and is blamed for an increase in unemployment.
Marriot Case Study Financial Policy, Professor Thorsten Truijens Jana Jauffret, Moari Avancini, Julian Gole, William Dottax, Toba Horombo EMBA; Geneva University 12 Q1. MC is experiencing a difficult period due to the real estate market crash in the late 80’s, which lead to a sharp drop of income in 1990 ($47 million). In its attempt to readjust to the economic downturn which followed the real estate crash, MC restructured and sold off unprofitable businesses. The cost of restructuring was high, leading to a depletion of cash and followed by important loan payments. The policy of reducing debt made MC leave the company with just $36 million cash which was well under the number of 1990 ($283 million cash ).
If anything affects these factors will result in affecting the demand. For example, if inflation is getting too high, interest rates will be increased to stabilize the economic growth in the economy. This is the result of having the economy already close to full capacity which means that a further increase in AD will mainly cause inflation. Demand side policies include monetary policy and Fiscal policy. Monetary policy are actions of central bank, currency board or other regulatory committee that determines the size and rate of growth of the money supply, which in turn affects interest rates.
Unemployment is “people of working age who are without work, available for work and actively seeking employment”(Blink & Dorton, 2007). A recession is “a period of temporary economic decline”(Google), and is clear in the UK, that unemployment-levels are rising due to this. The number of people unemployed is referred as “the pool of unemployment”(Blink & Dorton, 2007), and factors that cause a rise are known as “inflows”. This diagram portrays the UK’s “macroeconomic-labour market”(Blink & Dorton, 2007), which represents the total demand and supply for labour within the economy. Hence, total demand or the ‘Aggregate Demand’; ADL (“total demand for labour at any average wage rate”(Blink & Dorton, 2007)) for labour is inclusive of all its forms (ranging from production workers, to bankers) that are involved in producing good’s or services in an economy.
However, the SPH program put a lot of pressure on store managers and sales. In 2010, a large group of the R&R associates sued it for “working off the clock”. This lawsuit might cause reputation damage, and the settlement is up to $200 million. In 2008-2009 before the case, there was an economic recession. The whole luxury goods industry in the U.S. dropped over 14%, and R&R revenues declined 10%.
The Components for Aggregate Demand are C (consumption)+ I (income)+ G (government spending)+ (X-M) (net exports) and a change in the components of Aggregate demand will cause a shift of the curve. Fiscal policy is a type of economical intervention where the government injects its policies into an economy in order to either expand the economy’s growth or to contract it. By changing the levels of spending and taxation, a government can directly or indirectly affect the aggregate demand. Fiscal policy can be used in order to either stimulate a sluggish economy or to slow down an economy that is growing at a rate that is getting out of control. There are two types of Fiscal policy put in place to alter the level of aggregate demand; Expansionary fiscal policy and Contractionary fiscal policy.