INTRODUCTION Economic growth is defined as the increased capacity of an economy to be able to produce goods and services in comparison from one period of time to another. This is figured by the genuine Gross Domestic Product (GDP) and development, and is measured by utilizing genuine terms such as “Balanced Inflation”. These terms help to remove any distorted views on the perceived outcome of inflation on the cost of merchandises produced. Likewise, Economic growth is related to the high expectations in a person’s standard of living. If the standards are high, it wouldn’t be beneficial for the economy as the working class individuals will face a lot of trouble.
This means as employees’ nominal wages increase with inflation their real wage (purchasing power of nominal wages) may remain constant. Since inflation reduces the incentive for households to save, it causes a shortage of savings for firms to borrow. Firms finance investment (the purchase of new capital goods) by borrowing money. Therefore, if there is not saving funds for investment will
Triest suggest that as labor becomes scarce and costly relative to capital, producers will try to shift the labor productivity schedule outward through capital deepening or innovation. Accordingly, economists would expect to find a negative relationship between the growth of the labor force and the growth in labor productivity. Cutler et al. (1990) also argue that incentives to innovate are strongest when labor is scarce. Conversely, Gordon states that productivity growth has been flat in recent years.
A firm may be compared to another one which is of a different size, technology and diversification of products. Rations do not consider the effects of inflation on a firm’s performance. For instance, increased sales may be due to increasing the selling price as a result of economical inflationary pressure. Moreover, ratios do not consider the non-quantitative characteristics of the firm such as customer loyalty, technological advancements and the corporate image. Moreover, the computation of ratios occurs only at a certain period of time and is affected by frequent changes thereafter such as cash changes and changes in stock levels.
High debt burden, therefore, it is usually not appropriate. More stable and mature company usually requires less debt financing growth, the income is stable and reliable. The company also produces cash flow can be used in the conflict, to fund
A minimum wage set reasonably over the market wage can still cause establishment-level employment to upsurge, despite the decline in establishment-level labour supply. That is because if all firms offer higher wages, the labour participation rate must increase too. So, even in the case of multiple employers, a minimum wage set reasonably higher that the market wage can increase employment through bigger labour market participation
The cash ratio is the number of times that the company could meet its current obligations to its current cash balances. The higher the reserve ratio, the more likely a company will be able to pay its short-term debt. Shortly before failure, companies often have very low cash reserve ratio, low levels of inventories, receivables and relatively low current high ratios. Therefore, analyze that Bayou is lays on which position (Henderson et al.,
Two types of general increases are frequently given within BUNNI. The most common is the cost of living increase. Indeed to say that time erodes an employee’s buying power because of inflation. A measure of this erosion is provided by the law unit and legal aspect in BUNNI. If inflation outpaces pay increases, the employee’s buying power is reduced.
Also, it refers to the general price level increase because of increasing of consumer which is manifested in consumer price index (CPI). CPI is used by the consuming public to recognize how their purchasing power is getting effected. It aims to compare the cost of purchasing the market basket bought by a typical consumer during a specific period with the cost of purchasing the same market basket during earlier period. (Gwartney, James D.; Stroup, Richard L.; Sobel, Russell S. 1999) Due to real factors, the demand-Pulled Inflation will occurred by issues such as: fall in tax rates, without change in government spending, increase in investments, increase in government spending without change in tax revenue, decrease in savings, increase in exports, and/ or decrease in imports. For instance, buyers started generating more income or more volume of money, thus there will be high demand and the price of the goods or services will be increased.
Stages of maturity and stability, higher earnings are prompting firms to provide advantages from the use of debt. And it suggests and agency theory, firms managed by the owner, has the lowest debt ratio, which will tend to gradually increase its development. This process will be followed by the issuance of new shares as well as specialized hiring