What is Supply and Demand in Business?

Learning Goal: I’m working on a writing question and need support to help me learn.Respond to two discussion posts . add reference to back up your response .1.The Spending by the consumer or household sector of the economy does determine prosperity or recession in the economy. For example, I-phones supply and demand the need to produce more because it’s such in a high demand. When something is in a high demand the economy stays afloat and business continues to boom. But once there is no need of the supply again you will start to see a downfall within the economy. Since food, gas, and house prices are on a rise many people aren’t able to afford the prices due to the high costs which in fact causes a recession with the economy and gas is in high demand because that’s how people go about their everyday of life, for instance people need gas to heat their homes, to cook their food, gas is needed in your car to get you from point A to B. With the high raises of the gas people are skeptical of going far locations and traveling because of the high prices. Gas is what keeps our world going and it’s always going to be need, but if that also slows down tourism because people refuse to go long journeys and therefore it slows down the businesses and without revenue coming in companies must lay off their workers. Food is a necessity which we need to eat which the grocery prices has risen, so people become very scarce in what they decide to buy, such as the more expensive brand or become limited with the number of groceries they decide to pick up that causes an issue as well if people aren’t buying as usual there will be no need to have much factory workers, so they come laid off. If the demand for a good is greater than it supply, then the opposite will occur Suppliers will increase their prices to earn more profit with the products they already have, until eventually the supply and demand reach an equilibrium at some peak price. When the demand for a good is greater than the supply it is referred toa as a shortage. (Pestle Analysis 2020).The Government sector has changed over the past decade because of the amount of money that they have been spending in order to stimulate the economic growth with billions of taxpayer dollars appropriated toward the effort, policy makers should examine whether federal spending actually promotes economic growth. Government spending is less likely to stimulate growth when it cannot accurately target the projects where it would be most productive. (Stratmann June10, 2010). The spending has increased tremendously with the money being dispensed for many different reasoning, for instance in the past 2 years we have been battling with a deadly virus which not only has the US money had to go towards the country but also towards other poor countries that need assistance as well in order to slow the spread of the virus. Billions of taxpayer dollars have been spread across the globe to assist with the crisis. Then money was given out due to the fact that people lost their jobs and wasn’t able to work due to the crisis that took place. When they developed the vaccine for the virus that was even more money that was spent in order to push out the vaccines not only for the US but also other poor countries that weren’t able to get the supply quick enough. All these changes that has occurred effected the economy in a major way because the money is not being spent the way it needs to be spent in order to continue to have the economy to thrive and lessen the expenses that is being accrued.ReferenceStratmann (June 10, 2020). Monetary Policy. Does Government Spending Affect Economic Growth?. https://www.mercatus.org/publications/monetary-policy/does-government-spending-affect-economic-growthPestle Analysis (2020). What is Supply and Demand in Business?, https://pestleanalysis.com/supply-and-demand-in-business/amp/2. Yes, I agree with this statement that the spending by the consumer or household sector of the economy determines the prosperity or recession in the economy. This could be explained by this fact that GDP contains 4 items that are consumption expenditures, government spending, investment expenditures and net exports (exports minus imports). Consumption expenditures make more proportion of the GDP because when more consumers are willing to spend more, demand will increase and producers will produce more goods and services to meet the consumers’ demand at low cost. With the increase in demand, prices will increase, wage rate and employment level will also increase and profit will also increase with the increase in prices and overall the economy will prosperous. Likewise, when consumers will spend less, there will be less production of goods due to low demands, employment level will fall, prices, wage rates will also decrease and in turn, there will be low profits and the economy will go into recession (Simpson, n.d).This does not mean that government spending and business have no impact on the economy. They also impact the economy along with household sector to create a multiplier effect on the country’s economic position. Government influences through taxes or by allowing subsidies. Government spending has changed over the past several years. Government spending increase from $993 billion to $1595 billion from 1980-1990 and the growth rate was 4.8% annually and in the 1990s that rate was increased to 5.6%. During the period of 2000 to 2002 government spending increase from $2748 billion to $3347.6 billion and the rate is still increasing in developing countries (Fan, Saurkar, n.d). The increase in government spending leaves fewer funds to spend on expansion funds because it raises the cost of capital. The government, through its taxes, also put a burden on the economy. Consumers are less willing to spend due to heavy taxes. So, government and businesses affect the consumers’ spending behavior.ReferencesFan, S. Saurkar, A. (n.d). Public spending in developing countries: trends, determination, and impact. Retrieved from http://siteresources.worldbank.org/extrespubexpanaagr/Resources/ifpri2.pdf.Simpson, S. D (n.d). Macroeconomics: Government – Expenditures, Taxes and Debt Retrieved from http://www.investopedia.com/university/macroeconom…

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