Assignment 2: Monetary and Fiscal Policies P3: Outline how both fiscal and monetary policy decisions have affected a selected business. M2: Analyse the effects of fiscal and monetary policies for a selected business in terms of the market in which it operates Tesco like every business will be affected by Monetary and Fiscal policies, whether this be directly or indirectly. Tesco PLC will be affected more indirectly by these policies and in this report I will explain how. Fiscal Policy involves the Government changing the levels of Taxation and Government Spending in order to influence AD (Aggregate Demand) and therefore the level of economic activity. Monetary Policy involves using interest rates or changes to money supply to influence the levels of consumer spending and Aggregate Demand. The objectives of the government are: 1. low inflation CPI = 2% 2. Strong economic growth. 3. To Reduce unemployment 4. To avoid large deficit on current account balance of payments Fiscal Policy The Fiscal Policy may be Expansionary or Deflationary. Currently the policy is expansionary. This involves increasing AD, therefore the government will increase spending and cut taxes. Lower taxes will increase consumers spending because they have more disposable income. This will worsen the govt budget deficit. The other method is Deflationary fiscal policy this involves decreasing AD therefore the government will cut their spending and or increase taxes. Higher taxes will reduce consumer spending. This will lead to an improvement in the government’s budget deficit. Tesco will be affected by direct and indirect taxation which in turn has impacts on business costs, on aggregate demand, and therefore on business revenues. Direct taxat... ... middle of paper ... ...cial banks and the consumer to decide how to go forward. The Bank of England firstly pumps money into all the commercial banks this is done by them buying assets such as bad loans from them. This is done so in turn the commercial banks will lend more money to the consumers. As a consumer we must then spend this money increasing demand and therefore overall sales. If sales are up then profits too will be higher. This is a positive thing for Tesco has a larger demand for their products allow them to grow and expand due to greater profits. When an economy is in a recession the government has to act differently in order to increase demand and help businesses survive. The money supply method of the monetary policy is a good idea in theory but because of the current economic crisis, banks don’t feel secure enough to lend out there money as the return isn’t guaranteed.
Online Stores Tesco wants go into other markets because they would be bringing in more customers, which are going to increase profit. They also have another aim which is to expand internationally because they already operate within the Europe. They have to set themselves new aims and objectives that are harder to achieve as it’s the expanding further.
Tesco PLC's Expansion in North Bracknell Introduction: Tesco PLC is an international supermarket not only selling high quality goods but has now also become one of the biggest job markets. As well as this Tesco has been running sub-projects to increase the level of customer care. [IMAGE] Tesco's main aims are shown by the steering wheel provided by their website (www.tesco.com). Tesco want to have good quality for value to earn their customers loyalty while still making a profit. I will be investigating the Tesco Superstore, petrol station, pharmacy and coffee shop in North Bracknell (Warfield).
Tesco is a UK based Supermarket Company which was founded in 1919 by Jack Cohen, since then it has grown to become a multinational company which specialises in a lot more than just groceries, this has improved the overall profit of the company. The overall employees recorded at the end of 2015 was 476,000+, this shows that is a source of employment for nearly half a million people in the UK. The supermarkets are no longer just in the UK they also have shops based in Malaysia, India and Poland, this presents that they are increasing the size of business to a multinational company and is also a good source of jobs for people in poorer countries. In the world over 75million people travels
Tesco also has various and wide range of products and that is to meet customers’ needs of whatever customers intend to buy, nearly whatever customer intends to buy would find it underneath one ceiling (at Tesco). On the top of selling groceries Tesco sells others products such as, books, CDs, DVDs to buy, DVDs to rent, games, flowers, electronics, cosmetics, etc.
Tesco is a public limited business and therefore is in the tertiary sector as it provides a service to the public, this means that the business is owned by many shareholders. Tesco sell their shares on the stock exchange and are number one out of its competitors in terms of number of shareholders. Having a high amount of shareholders means that the business needs to make and retain profit levels high so that they trust and gain loyalty to the
Tesco must also follow their statutory duty which ensures that their employees have adequate welfare facilities. Employees also have specific duties they got to follow by law which includes them to take reasonable care for health and safety for them and the people around them, they must also co-operate with the employer or any other person to enable the employer or other person to perform or comply with any legal requirements.
In Keynesianism, government uses fiscal policy, which is a list of policies that government spending and taxing can be used to improve the performance of an economy. The government produces stabilization by taxing and spending yearly plans. Taxing can occur when inflation is high, and lowering taxes tends to occur during a high percentage of unemployment. By lowering taxes, it increases disposable income or the amount of income that goes to financial responsibilities. When people have more money, they are able to spend more, which in return goes into jump starting the economy.
In today’s economy, fiscal policy plays a vital role in influencing the financial direction and economic goals of the United States. Furthermore, government spending and taxation are two main economic activities that influence a nation’s economy and are generally referred to as the fiscal policy. Not only does the fiscal policy help determine a nation’s budget, but it also determines how much resources need to be allocated to help achieve their economic goal. Therefore, the fiscal policy has many functions and consists of allocating, distributing, stabilizing and developing the nation’s economy.
Economist John Maynard Keynes is credited with giving deficit spending academic legitimacy when he published “The General Theory” in 1936, even though many of his ideas were rebranded. (Deficit Spending, 2008) The advantages of deficit spending are that is helps
They are highly skilled in areas of design, technology, training, and research and development. In addition, Tesco has a superior presence in the area of manufacturing.
In the study of macroeconomics there are several sub factors that affect the economy either favorably or adversely. One dynamic of macroeconomics is monetary policy. Monetary policy consists of deliberate changes in the money supply to influence interest rates and thus the level of spending in the economy. “The goal of a monetary policy is to achieve and maintain price level stability, full employment and economic growth.” (McConnell & Brue, 2004).
Monetary policy is the mechanism of a country’s monetary authority (usually the central bank) taking up measures to regulate the supply of money and the rates of interest. It involves controlling money in the economy to promote economic growth and stability by creating relatively stable prices and low unemployment. A monetary policy mainly deals with the supply of money, availability of money, cost of money and the rate of interest to attain a set of objectives aiming towards growth and stability of the economy. Here are some of the monetary policy tools:
The reduction of government role in the economy will affect fiscal policy by decreasing deficit spending a...
The term Monetary policy refers to the method through which a country’s monetary authority, such as the Federal Reserve or the Bank of England control money supply for the aim of promoting economic stability and growth and is primarily achieved by the targeting of various interest rates. Monetary policy may be either contractionary or expansionary whereby a contractionary policy reduces the money supply, reduces the rate at which money is supplied or sets about an increase in interest rates. Expansionary policies on the other hand increase the supply of money or lower the interest rates. Interest rates may also be referred to as tight if their aim is to reduce inflation; neutral, if their aim is neither inflation reduction nor growth stimulation; or, accommodative, if aimed at stimulating growth. Monetary policies have a great impact on the economic stability of a country and if not well formulated, may lead to economic calamities (Reinhart & Rogoff, 2013). The current monetary policy of the United States Federal Reserve while being accommodative and expansionary so as to stimulate growth after the 2008 recession, will lead to an economic pitfall if maintained in its current state. This paper will examine this current policy, its strengths and weaknesses as well as recommendations that will ensure economic stability.
Everyone has their own political leaning and that leaning comes from one’s opinion about the Government. Peoples’ opinions are formed by what the parties say they will and will not do, the amounts they want spend and what they want to save. In macroeconomic terms, what the government spends is known as fiscal policy. Fiscal policy is the use of taxation and government spending for the purposes of stimulating or slowing down growth in an economy. Fiscal policy can be used for expansionary reasons, which is aimed at growing the economy and increasing employment, or contractionary which is intended to slow the growth of an economy. Expansionary fiscal policy features increased government spending and decreases in the tax rates as where contractionary policy focuses on lowering government spending and increasing tax rates. It must be understood that fiscal policy is meant to help the economy, although some negative results may arise.