The paper "The Impact of the Decline in the Car Industry on the State of the UK Economy" is a wonderful example of an assignment on macro and microeconomics. The macroeconomic indicators such as economic growth, unemployment, inflation, de, mand and supply of commodities have been largely affected by the current economic crisis in the world. For instance, the CBI predicted that there will be an unemployment rate of three million before the next election in the United Kingdom, Germany. It also predicts a general drop in the output and increases in the prices of houses due to inflation.
These variables have largely affected the car industry in the world where people have lost their jobs and more are still expected to lose their jobs soon because of the current economic crisis. The crisis has therefore affected the demand for cars in the world and it has been contributed by other factors. General Motors have widely been affected by the ad versed global economic threats which has led the company to reduce their sale, off laying of an employee within a short period of time and hence affected the demand from customers in a car purchase.
The following are some of the economic factors which have resulted in the dramatic fall in demand for cars. The income gained by both the employee and the manufacturing firms is a likely hood affecting the demand for goods and services. When employees are paid more and there is equality in salary payments, then they are likely to increase demand for a good or service. When the employee’ s income and salaries fall due to unemployment, then they will be likely to reduce their demand for goods and services.
This means that the demand for vehicles is likely to reduce in the car industry. The price changes in substitute goods and services, that is when the surrogate falls, the demand for the cars wills also fall. The price changes and rise in complement goods and survives in the motor industry then the demand for the purchase of motor vehicles has automatically fallen. this has to lead the companies like BMW in Cowley to confirm job cuts in the figure of 850 employees at its mini-factory
Paul M. (2005) “Growth Theory” Aurburn: Haley Centre
Information on the factors that affect demand available from www.ecoteacher.asn.au
Retrieved on 28th April 2009
Information on the effect of demand on goods and services in the market available from
www.bized.co.uk Retrieved on 29th April 2009
Information on “Unemployment” available from www.alex.edfac.usyd.edu.au
Retrieved on 29th April 2009