Q1. An overview of the selected company (history, financial status, etc.)
Chrysler is the recognized as the third largest Detroit’s auto firms around the globe. The invention of the Chrysler can be traced from the Maxwell Motor Company that was formed in 1913. In the early 1920s, the company faced financial constraints, and they sold their rights to Walter P. Chrysler. I think that Walter approach to revitalizing the company was unique, and this is the reason the company bounced back to reign the automobile market. Chrysler is presumed as the pioneer to convince the firms to manufacture competitive vehicles. I posit that the alteration of the vehicle identity from Maxwell Motor Company to Chrysler was efficient to allow the president to make critical decisions (Macdonald, 2013). I believe that the president’s crafty skills allowed him to rebuild Chrysler foundation to a giant automobile manufacturer in the American Market. Additionally, I assert that the firm’s acceptance to participate in defense contracts was influential in building its brand.
Although Chrysler was a household name in the American market, I ascertain that the company is a severe financial stress. The company has decided to merge with other firms to salvage itself from bankruptcy. I view that sound measures and policies have to be built to shield the company from suffering another brink of bankruptcy.
Q2. Define basic nationwide macroeconomic indicators and find time series data for the last 10 to 15 years. Define and find time series data for firm level indicators
The basic macroeconomic indicators are interest rates, government fiscal and monetary policy, employment indicators, GDP indicators, gross domestic product, retail sales and balance of payments. The balance of payments refers to the difference between imports and exports. Employment indicators quantify the health of an economy. Consumer price index plays the role of levels in the retail prices by calculating the price levels (Burda, 2012). Time series data refers to values that are obtained from a variable from a period such as a month. On many occasions time series data happens where there are equal measurements that are recorded.
Q3. Explain whether current economic conditions are more consistent with the Keynesian or classical economic theories. Summarize the impact of the macro-environment
The current economic conditions are consistent with Keynesian or classical theories because in the current world there are issues of unemployment and fiscal policy applications. The unemployment currently experienced in the USA has been triggered by high and rigid real wages. Keynes maintained there is more complication than that specifically that societies are extremely resilient to reduced wages and besides that cutting wages would sham a significant threat to an economy. In addition, another economic condition that correlates is the fiscal policy. In addition, the main notion articulated in fiscal policy is the anticipation that the government officials can lessen the adverse effects of the existing business cycle (Coddington, 2013). Fiscal policy can be attained by deficit expenditure in the periods of recessions and subdual of inflation during thriving eras.
It is crucial to note that significant external and uncontrollable factors that impact an organization's decision making, and affect its performance and policies. From my experience, in presuming that these factors include the economic, demographics, legal, political, and social conditions, technological changes, and natural forces. These factors that impact a company's or product's development but that are out of the enterprise's control. For instance, the macro environment could include competitors and alterations in the interest rates.
Q4. Analyze the relationship between inflation, unemployment, and the business cycle on the selected industry/company
The ups and downs of the GDP make headlines in the auto sales. The peak in 1978 was characterized by the rise and fall of the sales cycles. Some sales realized will not be comparable to the earlier ones because of the differences in technology which develops durable Chrysler products. The unemployment and inflation levels affect the figures of Chryslers sold. Auto sales generate production ranges, and this leads to the employment rate. In addition, I foresee job reducing in business cycles that lower in the period of a recession. Unemployment and inflation share a direct relationship with each other (Slawson, 2014). For instance, for a long time, inflation rates in the U.S have been high relatively to unemployment rates. From my research, I view that higher rates of unemployment are associated with low levels of inflation.
On the business cycle side, an entire tightness in the economic cycle of real GDP will lower inflation. A recovery in the business cycle appears when GDP returns to its initial peak. The trough is identified by its prevalent depreciating demand and extra capabilities. On the peak, the market starts to overcome the capacity of the economy to supply it. In this stage, labor and product shortages area evident in the Chrysler. The continuous contractions and recessions in the economy are associated with a decrease in the real GDP.
Q5. Provide a brief evaluation of the impact of past and current fiscal policies and monetary policies on the economy and the selected industry/company
Monetary policies involve raising or lowering interest rates. When the interest rates are lower, the Chryslers become cheaper, and this depicts more auto jobs. However, when the interest rates are higher, the merchants have unsold cars and auto jobs are less. The impact of such a monetary policy is fewer taxes levied by an industry and intense unemployment insurance payments which influence fiscal policy (Wadsworth & de Juvigny,2012). Furthermore, Chrysler was salvaged during the financial crisis of 2008 and had to be supported by the government. This fiscal policy was crucial because it was effective to shield numerous jobs directly, or indirectly on the industry.
References
Burda, M., & Wyplosz, C. (2012). Macroeconomics: a European text. Oxford university press.
Coddington, A. (2013). Keynesian Economics. Routledge.
Macdonald, C. L. (2013). The shopfloor experience of regional policy: work and industrial relations at the Bathgate motor plant, c. 1961-1986 (Doctoral dissertation, University of Glasgow).
Slawson, W. D. (2014). The new inflation: the collapse of free markets. Princeton University Press.
Wadsworth, J. E., & de Juvigny, F. L. (Eds.). (2012). New approaches in monetary policy (Vol. 4). Springer Science & Business Media.
