discussion w - conservatively manage their assets and...

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Economics are key factors and plays a very crucial role influencing businesses and organizations. Variations within the economic settings tend to have robust influence on a business or organization functionality and performance. Several factors and variables affect the economy as a whole and businesses in particular, because businesses contribute on large scale to the success and/or failure of the national economy. One of the main variables that has a great impact the economy is the gross domestic product (GDP), which is the final dollar value of the goods and services produced by an economy over a period of time (Andolfatto, 2008) and used to gage the current economy’s productivity. GDP can have a positive impact on the economy by stimulating the job market and increase businesses’ productions of consumer goods and services. On the other hand it can negatively impact the economy by driving it to recession if the event of a GDP deflation, therefore organizations and businesses would refrain from expanding and may start laying off employees and reducing its production to lower their costs and
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Unformatted text preview: conservatively manage their assets and preserve the capital. Inflation is another variable affecting the economy, it depicts an increase in the currency being circulated or printed thus decreasing the value of the currency. We often say that we could get more for our money many years ago vs. what you can buy today. That said, the Quantity Theory of Money theory states that inflation is caused by an expansion in the money supply of a given economy. While according to the Keynesian theory inflation is viewed as If a given economy is at its full employment output level, an increase in government expenditure (G), an increase in private consumption (C) and an increase in private investment (I) will create an increase in aggregate demand; leading towards an increase in general price levels. References Andolfatto, D. (2008). Macroeconomic Theory and Policy . Retrieved on Sept 9, 2015 from htp:// ...
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