discussion 1 g - Inflation is in terms inflation refers to...

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The success of a business has greatly to do with the current state of the economy. Effects on the national market are variables that can effect a new business or one that has been established. It is essential for a business to understand the macroeconomics to predict the future of potential market. The two variables that I have chosen to discuss is the Gross Domestic Product (GDP) and Inflation. The Gross Domestic Product is the production in the economy “The total value of final goods and services produced in the domestic economy over some given period of time.” (Andolfatto, 2008). As the GDP is on the positive side that would influence job growth and further production for consumption. If the GPD happens to deflate it will show signs of a recession is about to ensue. A company will evaluate the current health of the economy to determine acts of expansion or further development. On the happenstance of a recession corporations would be less likely to expand or seek further development with less likely a lower economy will bear fruit.
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Unformatted text preview: Inflation is in terms inflation refers to the increase of money printed or supplied. As the amount of money is printed it will drive up prices for services and products. As a child I was able to buy a various amounts of candy and soda with two to three dollars. Today if I take my daughter to the grocery store a single candy bar and soda is almost triple the price (not to mention a lot smaller) then when I was a child, these instances are due to inflation. The aspect business would have to consider when it comes to inflation is calculating the Time Value of Money (TVM). Companies who seek to invest and receive a loan will calculate the interest factoring the TVM and inflation costs included. To ensure the company will not receive less money in the future due to inflation. References Andolfatto, D. (2008). Macroeconomic Theory and Policy (2nd Edition) (2nd ed.). Munich Personal RePEc Archive....
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