Premium Essay

Economics of the Business Environment - Base Metals

In: Business and Management

Submitted By ronbans
Words 674
Pages 3
U.S. is the second largest importer of base metals after China (Indexmundi.com, 2013). It is the third largest exporter of base metals after China and Germany (Indexmundi.com, 2013). We can make the assumption that this makes U.S. a net importer of base metals.

Base metals are mainly used as (a) input by manufactures producing consumer goods and (b) for infrastructure projects. They themselves are not demanded directly by consumers. If global prices of base metals were to go up, in theory, the U.S. will first see an impact on the "input" side of the economy (figure 7). Production costs will go up and producers will pass this one to the end consumer (P1 to P2). Raw material price increase will shock the supply to shift left (AS1 to AS2) and negative output gap increases (Y1-Y* to Y2-Y*). With increased prices, aggregate demand will go down. The AD curve will shift down (AD1 to AD2). This will result in a fall of real GDP, increase in the negative output gap (Y3-Y*) and prices may fall somewhat to P3.

If there is no supply side change, typically, increases in the negative output gap will cause inflation to go down. The only time inflation increases with increasing negative output gap is when the AS curve shifts left and AD shifts down as well.
To substantiate this, the following data has been presented as below, with main emphasis in the 2007-2008 periods:
1. Figure 8a (Research.stlouisfed.org, 2013 and Databank.worldbank.org, 2013) shows that from around 2008 the U.S. has increasing negative output gap.
2. Figure 8b (Databank.worldbank.org, 2013) shows that around the same time, GDP was shrinking and there was a spike in inflation (consumer prices).

There were different elements at play in this time in the U.S. like the housing market crash and it was the start of an economic downturn, but increased commodity prices made inflation spike...

Similar Documents

Premium Essay

Manage Human Resources Strategic Planning

...imported from Britain. The Business, based in South Wollongong in New South Wales (NSW), produced casting lamp posts and manhole covers for the sewerage system. It also catered to the needs of the defence forces during the Second World War. Additional contracts also came from government client’s including the NSW railways. The business is now owned and managed by the third generation of the family – two brothers and one of their cousins. This team has been running the business for the past 20 years and make all the decisions. They still do business with the government departments. They have been investing in updating their plant and equipment. A major portion of the business comes from small private manufacturers who need iron casting parts for their products. The transport cost of delivering the raw materials has also gone up and the local government has imposed strict regulations because manufacturing the castings has a direct impact on the environment. Most of the Kangaroo Foundry Casting’s customers are no longer in NSW due to tough competition. The demand for their products has changed. Their customers are now looking for cheaper and better quality products that compete with suppliers from overseas. Due to changes in technology, overseas suppliers are offering better-quality products at competitive prices. However, government policies are in favour of improving the competitive advantage of the Australian industry. The recent economic downturn has severely......

Words: 908 - Pages: 4

Premium Essay

Case Study

...Armenia exceed the risks associated with the Armenian economy and as a result I would recommend our company to set up a business in Armenia. The Armenian economy is growing at a fast rate due to its political stability, free-economic zones, trade agreements with key partners, and an abundance of natural resources. Gross domestic product and foreign direct investment are increasing at fast rates and this has led to recent improvements in social and human development in the country. This will also improve skilled workforce in the country in the near future. Armenia is getting involved with the leading countries in the world which is impacting Armenia to increase its capacity to gain a competitive advantage in the global economy (Global Edge, 2014). Country description: Armenia was ranked first among CIS (Commonwealth of Independent State) and CEE (Central and Eastern Europe) countries in GDP per-capita growth rates from 2000 to 2008. Growth slowed at the end of 2008, and actually declined in 2009, primarily due to the effects of the global economic crisis. But in 2010-2011, the economy experienced renewed growth. After the upturn in economic activity in 2011, the economy slightly slowed in 2012, limited by less favourable external conditions (Global Egde, 2014). Armenia is very dependent on the Russian economy and investment is the main contributors to economic growth. The country is engaged in the construction of a number of large infrastructure projects to link the country......

Words: 1658 - Pages: 7

Free Essay

The Economy of Ukraine and Ukraine in the Global Economy

...educated labour force, - large domestic market, - well developed industrial base, - access to a variety of resources, including some of Europe’s best best agriculture land, significant coal and some oil and gas reserves, - strategic location connecting Europe, Russia and Asian markets. Nevertheless, Ukraine ended up among the least successful transition economies. The reasons for such a poor performance are different, but we should emphasize on the weaknesses deriving from overcentralised command economy during the Soviet period. I’d like to draw your attention to the Ukraine economy past in order to understand its current situation. Large and often inefficient state-owned factories, enterprises and collective farms wasted resources and emphasized quantity over quality. Prices were fixed and consumer goods were often in short supply. Excessive spending on the military hurt the civilian economy. For the last decades Ukraine is moving to market economy, where the forces of supply and demand and private ownership guide the allocation of resources. The transition to market economy is politically and socially difficult because of experience of rising inflation, unemployment and economic uncertainty before the long term benefits of market economy. The next point of this topic is overview of Ukraine’s main directions of economic development. The metal industry is Ukraine’s strongest sector of economic activity, accounting for 7% of GDP and around 40% of overall export.......

Words: 658 - Pages: 3

Premium Essay

Marketing Capella

...REI Marketing Environment WorksheetList the current characteristics of each environmental factor as they relate to REI. U.S. EconomyHow does the current U.S. economy affect REI retail operations? 1.The American jobless rate is currently at an all time low. The economy is enjoying an upsurge that is fueling the housing market and the stock market and resulting in the U.S public having more disposable income than in recent years. This turns into an up rise for most retail and recreational markets. 2. While the current economic outlook may be boosting the spending activity of most Americans, the demands of balancing work schedules and family life have resulted in a consumer that is extremely careful of how they spend their disposable income. They are demanding high quality, superb customer service and immediate attention. Those recreational retailers who can meet these demands will be the ones who will benefit most from the current economic climate. Global EconomyHow does the current global economy affect REI retail operations? 1. REI, like many U.S. firms are expanding their operations into overseas markets. As this is done, the economic climates of these markets benefit from the influx of cash resulting from the employment of their populations. Multinational corporations (MNCs) are moving operations to wherever they can find the least expensive labor pool that is able to do the work well. This action has the combined effect of increasing available markets......

Words: 800 - Pages: 4

Premium Essay

Nfpa Codes

...with OSHA 1910 Subpart S and OSHA 1926 Subpart K. NFPA 76: This standard provides requirements for fire protection of telecommunications facilities where telecommunications services such as telephone (landline, wireless) transmission, data transmission, internet transmission, voice-over internet protocol (VoIP) transmission, and video transmission are rendered to the public. A.1.1 It is not intended that this standard apply to private telecommunications facilities. Private telecommunications facilities include rooms specifically used for a business to deliver telecommunications to its employees, containing telecommunication for employees of a company. However, private telecommunications facilities do not include facilities that are owned by non-utility business that provide telecommunications services to the public, including, but not limited to, large medical facilities, universities, large corporate telecommunications networks, military bases, and private prisons. Telecommunications facilities are referred to as telephone exchanges in NFPA 101 and NFPA 5000. The 2012 edition of NFPA 101 classifies telephone exchanges as special-purpose industrial occupancies, and the 2012 edition of NFPA 5000 classifies telephone exchanges as industrial occupancies. 1.1.1 Telecommunications facilities include signal processing equipment areas, cable entrance facility areas, power areas, main distribution frame areas, standby engine areas, technical support areas, administrative areas, and......

Words: 1197 - Pages: 5

Premium Essay

Flrba Marketing Plan

...Dan Nicolosi Business Major at Bryant & Stratton College Student in Mrs. Schwartzman’s Marketing Management Class Marketing Plan for the Finger Lakes Regional Burn Association Designed for the years 2015-2020 For Mr. Paul Shwartzman Submitted on the Date of December 4, 2014 Introduction History of the Finger Lakes Regional Burn Association (FLRBA) Founded in the late 1980’s and formerly incorporated as a 501c3 in 1989, the Finger Lakes Regional Burn Association (FLRBA) is a non-profit organization committed to primarily serving residents of the Finger Lakes regional and occasionally beyond regardless of social or economic status. The idea for the burn association was first proposed by the Monroe County Fireman's Association. The staff at the Strong Memorial Hospital Burn Unit was receptive to the idea and organizational needs were established. The Rochester Fire Department was then brought into the organization. Since then, the association has grown to include other elements of the fire services as well as members of the emergency medical services, and interested professionals from throughout the community. The organization works to insure that anyone impacted by a burn related injury receives the necessary resources on their road to recovery while raising fire and burn prevention awareness. The initial goals established in 1988 still stand today. They are to present burn and fire prevention information to the community, to provide support to burn survivors,......

Words: 1720 - Pages: 7

Premium Essay

India's Trade Partners

...% of the world trade by 2020. Along with improving export competitiveness, it is also important to improve information base regarding trade policy regime of India’s main trading partners and identify areas which impede market access of Indian goods and services. The present report is an endeavor in this direction capturing the market access barriers faced by Indian exporters in its major trading partners and other select countries, 24 in all. Major trading partners: Exports: Major Export trading partners through which India trading are UAE 12.87%, US 12.59%, China 5.59% . The principal commodities of export include petroleum products, oil meal, gem and jewellery, electronic goods, cotton yarn/readymade garments, cotton, machinery & instruments, primary/semi-finished iron & steel, transport equipment, marine products, drugs/pharmaceuticals, inorganic/organic/ agro chemicals, dyes/intermediates etc. Imports: Major Import trading partners through which India trading are China 10.94%, US 7.16%, Saudi Arabia 5.36%, UAE 5.18%, Australia 5.02%, Germany 4.86%, Singapore 4.02% (2009). The major commodities imported from this region are coal/coke/briquettes, gold, vegetable oils, electronic goods, organic chemicals, machinery except electrical machinery, professional instruments, wood and wood products, non-ferrous metals, metalifers ores and metal scrap, raw wool etc.Trade Promotion Activities Trade relations between India and China: In the last decade,......

Words: 1315 - Pages: 6

Premium Essay

Marketing

...How to Create a Marketing Plan http://www.wikihow.com/Create-a-Marketing-Plan Edited by Bratest, Krystle, Chris Hadley, Thomas and 9 others The Marketing Plan: everyone will tell you that you absolutely have to have one. Few of the people who say that, however, are able to tell you what exactly a marketing plan consists of. Creating a marketing plan for your small business shouldn’t take you a few hours. Ideally, it should take you at least a few days to do the research and have the necessary discussions — potentially even a few weeks depending on factors like the size of your market and the uniqueness of your product line(s). The following article may help you in developing your marketing plans. Steps 1. 1 The Executive Summary. A high-level summary of the marketing plan as a whole, and a paradox on paper: this is the last section that you should write, but the first section that should be in the finished report. It’s best to keep the Executive Summary as short and sweet as possible — just a couple of sentences to sum everything up. While writing it, imagine that you’re going to present this summary “elevator pitch” style. Once you’ve finished it, read it out loud. If it takes you longer than ten seconds to read it all, it probably needs to be simplified even further. Ad 2. 2 The Challenge. This section should contain a brief description of the product(s) and/or product line(s) that your company offers. With each description, include goals that you want......

Words: 1083 - Pages: 5

Free Essay

The Influence of Disruptive Innovations on New and Existing Business Models

...THE INFLUENCE OF DISRUPTIVE INNOVATIONS ON NEW AND EXISTING BUSINESS MODELS. Introduction A disruptive innovation can be simply referred to as the application of technological advancement, product, or service that eventually overturns the existing dominant technology or status quo product in the market. Disruptive innovations are innovations that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market. Some examples of disruptive innovations include: telephones replacing telegraphs, cell phones replacing land lines, digital photography replacing films etc In today’s complex, dynamic business world, having a disruptive innovation capability is mandatory, both for growing a business and protecting existing markets. But leading disruptive innovation requires new mindsets and behaviors, for leaders themselves and for the organizations that develop them. Disruptive Innovation is not a break through innovation that makes good products a lot better; it transforms a products that is expensive and complicated as such only few people with a lot of money could afford it. Disruptive......

Words: 1676 - Pages: 7

Free Essay

Aditya Birla Case Study

... Class name Date Aditya Birla Group: Global Vision – Indian Values Aditya Birla Group (ABG) was a US28$ billion worth corporation back in 2008. With the number of over 100,000 employees, business operations were spread all over the world including the wide variety of product and service companies. The product portfolio comprised Aluminum, Copper, Fertilizers, Textiles and Cement, Insulators, Viscose Filament Yarn, Carbon Black, Insurance, Telecommunications and Business Process Outsourcing. Over the years, the ABG approached the methods of strategic alliances and acquiring big producers, adding to the value chain of the business, from metal to downstream products. By entering an international joint venture with NGK Corporation of Japan, the company was expected to open up to global markets and provide access to the latest in product and manufacturing technology. The idea was to exit from that area of business where they couldn’t compete due to a lack of competencies and business strengths. Kumar Mangalam Birla (Chairman of the Group) introduced several organizational and management changes that focus on learning centers, young managers and organizational health surveys. Along with the Aditya Birla Sun awards, this approach resulted in healthy competition among the companies. The growth strategy in this case......

Words: 1280 - Pages: 6

Premium Essay

Reverse Logistics in Indian Automobile Industry

...the nature of the final product i.e. Automobiles or Vehicles as we call them. The parameter one needs to look at is the life cycle of the product and what happens to the final product once it reaches the end of its useful life. By its very nature, it’s difficult to predict the life cycle of the final product. This is because; it is highly susceptible to the nuances of the human subjectivities. But even if we are unable to predict the duration of the life cycle, we have definitely something figured out for us. What I am referring to is a common observation that even if the vehicle (Here we will be primarily focusing on the flagship product, an automobile) becomes defunct and is no more suitable for use, the same rule doesn’t apply to the metal (that is primarily Iron) that it has been made from. The Iron that has been used in the manufacturing of a vehicle stays in...

Words: 1394 - Pages: 6

Free Essay

Business Report: Mining Industry in Bc

...Introduction The exploration and utilization of resources has played a significant role in the development of Canada. Most socio-economic achievements in Canada’s history have been closely related to natural resources. While activities such as fishing and agriculture have traditionally paved the way, perhaps none has contributed to Canada’s economic prosperity like the mining industry. As the sector continues to grow, so does Canada’s reputation as one of the world’s leading mining nations. Canada is one of the world’s top producers of major commodities such as uranium, nickel, cobalt, and more. With a pullback in performance over the past years, I expect the industry to rebound, as economic growth in China and the United States will increase resource demand. Despite the positive outlook, this is still a highly controversial industry. Many key drawbacks such as pollution, low employment, and high level of risk have made the mining world a highly criticized industry. The sector plays a crucial role in the economic, social and environmental stability of the country, making it a focal point for the government. Both industry participants and the government must work together to improve and stabilize the mining industry for British Columbia. This report is divided into 3 sections: • Section I outlines the history of the industry, leading up to the present. • Section II, which will provide an overview of the current state of British Columbia’s mining industry,......

Words: 1767 - Pages: 8

Premium Essay

African Minerals Case Study

...Strategic Direction of the African minerals Limited A company's strategy is management's action plan for running the business and conducting operations. "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". It now refers to a plan of action designed to achieve a particular goal. The African Minerals is concerned with how different engagements are linked. They are concerned with a certain course of action to meet designed goals and objectives, generally supposed to remain unchanged for a fairly long time period as the change in strategy...

Words: 1092 - Pages: 5

Premium Essay

Business Evrioment

...Business Environment - First Assignment Guidance Identify and explain the most important sources of product differentiation and market entry barriers, within your chosen industry. It is recommended that you choose an imperfectly competitive market structure (for example, monopolistic competition, oligopoly, or monopoly) to consider within your assignment. The characteristics of each market structure, in terms of the extent of product differentiation and market entry barriers, are presented below:- Perfect competition • No product differentiation. Tendency toward normal profits in the short-term, although in the short-term both super-normal and loss making situations can also affect firms within an industry. • No market entry barriers. Produce normal profits in the long term. Monopolistic competition • Product differentiation. Tendency toward short-term super-normal profits. • No market entry barriers. Super-normal profits cannot be maintained by the firm in the longer term, due to new market entrants increasing supply within an industry. Oligopoly (a few firms) • Product differentiation. Tendency toward short-term super-normal profit. • High market entry barriers. Enable firm to maintain super-normal profits in the long run. Monopoly (single firm) • Product differentiation. Tendency toward short-term super-normal profit. • Extremely high market entry barriers. Enable firm to maintain......

Words: 1425 - Pages: 6

Premium Essay

Singapore Financial Markets Analysis, Based on Ideas of William Lewis

...analysis at the industry level, rather than the macroeconomic level. Singapore has also followed an approach that has favored industrial policy. Recognizing its lack of natural resources, Singapore since the 1960s has focused on investing in 4 key industries: ship refitting and repair, metal engineering, chemicals and electrical equipment. The current emphasis is on the biomedical science industry. Singapore has been effective at identifying key industry “clusters” for development and growth, strategies that move its economy up the value chain towards knowledge-based sectors. The country can improve upon this by identifying new industries, such as the latest focus on biotechnology, which are beyond the currently established industries from decades past. - Skill training vs. education: Lewis argues that education is not directly linked to productivity, and that job skill training is more important to a society. In 1979, Singapore created the Skills Development Fund to help improve worker’s skill-based education, incentivizing employers to educate workers through grants. The government also attempted to raise wage levels as it improved the skill base of the work force. This strategy caused temporary economic contraction, though the...

Words: 1651 - Pages: 7