It affects the distribution of real income, people on fixed incomes suffer as the purchasing power of their incomes decrease as price levels rise. Secondly, purchasing power od households on fixed income decline, as inflation tends to result in more unequal distribution of income as those on lower incomes find their wages do not rise as quickly as those on higher incomes. In times of high inflation household tend to purchase real assets that retain their real value since their prices rise faster than the inflation rate. Finally, another negative impact is the income tax earners suffer from fiscal drag pay rises to combat inflation put them into higher marginal tax brackets. This means as employees’ nominal wages increase with inflation their real wage (purchasing power of nominal wages) may remain constant.
With so many people living on welfare programs, jobs are not receiving workers, there are more homeless people, and a ridiculous amount of federal money in place to support these programs. The most serious of the many effects of unemployment is the effect on the economy. “Higher unemployment will cause a fall in tax revenue because there is less people paying income tax. Also the government will have to spend more on unemployment and related benefits” (Pettinger). With a fall in tax revenue, the nation’s income as a whole is reduced, which decreases the amount of money in circulation, increasing the United State’s federal debt.
Wealthy people have a higher income and consequently spend less of each marginal dollar, which caused the economic growth to slow. Economic inequality is also one of the reasons of the Great Depression that occurred in the United States in August 1929. The Great Depression period was when the country first went into an economic recession. This period caused massive unemployment and an economic downturned. Income inequality can also cause a lower demand.
COGS increased which impacted gross profit and operating profit margin was also negatively impacted. Slow increase of sales also was not enough to support their expansion plans. Their interest expenses increased on their long and short term loans. This caused sweet dreams to have decreased earnings for their common stockholders. This is another indication that the company is not performing well.
Issues and Concerns of Unemployment in Malaysia For decades, unemployment is seen as a negative issue that affects a country all over the world including Malaysia. One person may become unemployed as long as he or she is involved in the labour market. If the unemployment issue is not solved, it will give rise to a series of social and economic problems in a country. The first impact of unemployment will cause an arise of criminal activities. Unemployment will drive someone to commit crimes as they are unable to afford their daily expenses.
The document reasons that if the amount of money employees earn is expanded, companies will be less likely to hire as many workers (Huppke). This causes job loss for future laborers. Businesses will not be able to financially employ as many individuals, thus, increasing the nation’s overall unemployment rate. Some employers find a means around decreasing the number of employees by limiting the amount of hours each individual can work (“Economists argue about minimum wage”). A second argument in the minimum wage war focuses around the concept of inflation.
It claims in lecture five that the profit earned by capitalists at the expense of workers will eventually fall due to the diminishing returns. Thus, the value of the commodities will decrease, which further reduces the workers’ wages and some of them might even lose their jobs due to the rising technological unemployment caused by the growing population. Workers will end up working even longer hours for less wages. As a result of this grown exploitation, not only the economic growth will slow down, but the disparity between the social classes will further increase social conflicts that lead to social instability since the rich are constantly trying to catch up with the “capitalist tail” by staying rich, powerful and ahead of the competitive game. However, this behaviour, as Marx believed based on Chris Hedges’ article, would cause capitalism to eventually exhaust its potential and collapse.
Now lets put a light on the disadvantages of Globalisation. The main reason for the downside of globalisation is that it distinguishes between social class ans status. This leads to political and social uneasiness and financial unreliability that will restrain growth. Many of the world’s poorest people do not have access to basic technologies and public goods. They are eliminated from the benefits.
Such a cut-down affects the industry and anyone related to this sector. On the other hand, inflation rates have a negative effect on the growth of the advertising industry. Inflation rates affect the prices of goods and services which also affects the purchasing power. If the purchasing power of the consumers decline, manufacturing industries will experience low returns. They will shift the burden to the advertising industry by reducing investment in the industry and therefore affecting growth.