Public spending Despite Netflixs investment in most of its money on content

Public spending despite netflixs investment in most

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Public spending Despite Netflix’s investment in most of its money on content, federal investments in the US have not supported Netflix at the moment due to its political backgrounds. Moreover, this has impacted Netflix’s expansion in the US grounds; therefore, it is reasonable that Netflix has sought to expand abroad. Based on BEA reports, from 2018 to 2020, the general government expenditures have been increasing, which aims to be the expansionary policy (S&P Rankings, 2020). Transfers In fiscal policy, transfer payments act in a similar way with taxes. Transfer payments can be described as the payments in which goods or services are not traded. Mainly, in the United States, the transfer payments consist of welfare checks, unemployment insurance, and social security. The differences in transfer payments continuously lead to differences in consumer income. According to Bureau Statistics, the general transfer payments have continuously risen as expansion in the last three years (2020). As a result, it stimulates higher purchasing power and an increase in disposable income, which is calculated by using income minus tax and add transfer. At present, there are no transfers for the company itself. Public debt As mentioned the Netflix spent a ton of money on building original content, it has been suffering in a budget deficit of 15 billion USD in debt. Despite that, the debt will not be killing Netflix as financial indicators signal that Netflix is leveraging its capital efficiently. With its return on equity performing so well, Netflix will choose to obtain more debt to optimize its cost on capital. For now, the public debt on Netflix is considered not as impactful as they get more subscribers overseas to cover their debt, and maintaining high levels of ROE, it should put Netflix Inc. in a favorable situation to expand internationally. 9
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Monetary Policy Monetary policy in America is simple; they want to promote maximum employment, stable prices, and moderate long-term interest rates. These are the three economic goals issued by the US Congress. Additionally, the central bank is more than willing to lend money for Netflix Inc. (NFLX), as they create many jobs and promote customers' online spending. In return, Netflix also offers a lot of job openings online, so it also fulfills the goals of maximizing employment. For the current money supply chain in the US, it is managed by the Federal Reserve System, and recently in 2020, the money supply increased to $17176.10 billion in April from $16103.90 billion (Trading Economics, 2020). It is likely that the US will lower their interest rates, which, in turn, generates more investment, thereby stimulating spending. It would lead to an increase in the inflation rate and the contractionary of their monetary policy. In this instance, the U.S annual inflation rate stands at 0.3%, their lowest since 2015 due to the plunge in gasoline prices, and its exchange rate with the Euro currency is 1to 0.89, which is relatively stable according to the US central banks (Central Bank, 2020).
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