MACROECONOMIC ANALYSIS
Russ Graziano
ECON 545
Keller Graduate School of Management
April 13, 2014
Introduction The idea Edgar has for opening up four new gas stations is based on a well based argument making it viable as a profitable business venture. The evaluation on the American consumer to accept the high price for gas oil prices forms the first approach towards establishing a business. Gasoil businesses in the world run as cartel where it supply and prices are determined by the few stakeholders in the industry. The stakeholders form an agreement among their competitors on the price, making and, marketing of the product (Fredy, 2010). The cartel though the production affects the GDP
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Convenience goods are those that are distributed widely and are inexpensive and the gas oil forms one of them (Fredy, 2010). Macroeconomic covers the demographic aspect, as these goods are made available to the population. Demography represents human residents statically (Henry, 2008).
Startup capital is a needed by Edgar as he plans to buy the four gas oil station. The fund borrowed from a financial institution will be affected by the interest rate and the financial policies. The monetary policy is a tool used to control the supply of money in the society through affecting the interest rate in the society (Tayor, 2007).The estimates of sales to increase in china and India represents the trade cycles. Business cycles are periodic change in the production and affect the Gross Domestic Product of a country. They cause the GDP to fluctuate and thus an expansion and contraction of the level of economic activities in the country (Tayor, 2007).
The business sets itself on time of favorable economic benefits as the bank rates are favoring a business positively. Edgar requires a large capital base to start a business and borrowing from a business organization is paramount. Interest is payable on the loan capital that is taking from such institutions. With a low lending rate, the business organizations enable economic growth as a society can borrow a large sum of money for the investment project. Investment
The oil and gas business is highly competitive in the exploration for and acquisitions of reserves, the acquisition of oil and gas leases, equipment and personnel required to find and produce reserves, and in the gathering and marketing of oil, gas, and natural gas liquids. The competitors include national oil companies, major integrated oil and gas companies, other independent oil and gas companies, and participants in other industries supplying energy and fuel to industrial, commercial, and individual consumers.
Currently Saudi Arabia is one of the leading producers of oil in the world. However, it is losing its foothold on the market. Many countries, like North America, are increasing their oil production and are looking for ways to become less dependent on foreign oil. The increased competition has caused oil prices to decrease. By producing their own oil, countries not only will increase their revenues, but will also reduce their need to rely on foreign oil. By reducing their need foreign an oil a country does not have to worry that their oil supply will be cut off if they go to war.
Another important factor to consider when starting a business is the “business cycle.” The business cycle is the fluctuations in economic activity that an economy will experience over a period of time. We have experience may business cycles in the United States. We refer to them as expansions and recessions. In an expansions, the economic outlook is good and growth happens, without inflation. Recessions are when the economy is shrinking and the determination factors for a recession include unemployment, low industry production, decrease sales and lower incomes. Since 1854, The United States has experienced 33
Gradually, the oil glut began to affect ordinary Texans. Soon after Spindletop, the availability of an ocean of cheap oil encouraged its use as fuel for transportation and manufacturing. After railroads converted from coal to oil, steamships followed, led by those operating in the Gulf of Mexico and the Caribbean. As automobiles became more common, roads began to be paved across the state. Mechanization of farm work increased quickly, enabling farmers to produce more food with fewer people. Manufacturing plants developed in the formerly agricultural state, using cheap oil as fuel. Texas' population scales, heavily weighted toward the rural before Spindletop, started to balance, and by 1940, the population was almost even: 55 percent rural and 45 percent urban. World War II tipped the scales, however, when wartime jobs at manufacturing plants in the cities lured large numbers of people from farms and small towns. Most never returned. This displacement of farming families was exacerbated by the absorption of many family farms into large corporate operations. Increasing numbers of migrants from other states and foreign countries also settled principally in urban centers. By 1980, the state was four-fifths urban. The political economy of resource-rich states faces an inherent tension between the role of the state and the private sector over control of
Going to the water was a hazard and they starved or was covered in the oiled
In today’s society, everyone seems to be in a rush. Convenience trumps nearly anything and everything. The closest and the promptest option is the one we often lean toward, regardless of the consequence or cost. One of the biggest convenience items within the 21st Century is gasoline. Regardless of the price, we often purchase this item at the most suitable site and time, especially when we are in desperate need of the item. Gasoline companies are alert that convenience is ideal; therefore, they alter gas prices to obtain the greatest amount of business.
To begin, I believe it prudent to discuss the macroeconomic considerations of rising gas prices on both the income and substitution effect. As such, a brief but comprehensive introduction will be needed to help make inference concerning consumer behavior. To begin,
Arguments have raged over Standard Oil and its business practices since its prime in the 1870's and 1880's. Was it a monopoly? Did it severely impede fair competition? If it was a monopoly, did it hurt the consumer? These are the questions that have been argued in debates about Standard Oil and its practices. Whether Standard Oil was a monopoly or not, the more important question to economists is, were the practices of the Standard Oil Company efficient and did it hurt the social wealth of the country? The government's enforcement of the Sherman Antitrust Act on Standard Oil hurt the country's social wealth and efficiency.
1. Select two companies whose product(s) you use in your daily life. You may choose any firms you wish, as long as their information is publicly available (as to their products and financial information) and they are known to the average person.
Discuss how rising oil prices might affect the macroeconomic performance of an economy. (25 marks)
The Importance of Oil in U.S. Foreign Policy During the oil and energy crisis of the mid-1970s Americans became painfully aware of the consequences of the United States dependence on foreign sources of oil. Unfortunately, research and exploration for alternative sources of oil in North America has not been pursued vigorously enough to cease such foreign dependence. As a result, in the mid-1990s Americans find themselves in the same precarious position as they were during the 1970s. The Persian-Gulf War in 1991 was all the proof needed to convince the United States of how strongly oil still influences our foreign policy and international relations in general. Oil and U.S. Foreign Policy: Historical Issues The United
crude oil allowed in at the bottom of the tower at a time so that the
In this text, I concern myself with the contents of two articles based on recent microeconomics issues. During the last two months, the price of gas in the U.S. has been on an upward trend. Taking into consideration recent happenings on the international scene, this trend could have been triggered by many different factors. The articles I make use of in this case discuss the rising oil and gas prices.
Since the past few decades, owning a car has become a necessity in order to commute from one place to another. However, cars do not work automatically, they require fuel. Since the past decade, the petroleum industry has become one of the leading industries impacting the nation’s economy. Oil has become an essential commodity as it is utilized in transportation vehicles, serves as a raw material for manufacturing plastics, and is utilized in homes for cooking. America’s economy is greatly dependent on petroleum as it is the “black gold” of the nation. The considerable significance of oil has led to the drilling of it, which is not only limited to land, but also the oceans. Offshore drilling is a method in which petroleum is extracted from underneath the seabed. It is one of the significant technological advancements in the past few decades. However, the ones who are involved in the process of offshore oil production are humans, and humans tend to make mistakes. In 1969, due to a human error, an oil spill occurred and natural gas, oil, and mud shot up the well and oozed into the ocean (“Offshore Drilling”). The oil spilled led to an environmental disaster which killed thousands of marine animals and distorted the environment. In order to prevent the same error, the government passed a moratorium in 1981, banning more than 85 percent of the country’s oil drilling sites (“Offshore Drilling”). The moratorium restricted the United States to mass-produce its natural resource.
Timing of the business cycle is not predictable, but its phases seem to be. Many economists site four phases—prosperity, liquidation, depression, and recovery. During a period of prosperity, a rise in production leads to increases in employment, wages, and profits. Obstacles then begin to obstruct further expansion. Production costs can increase, helping create a rise in prices, and