Term Definition Paper Essay Example | Topics and Well Written Essays - 1000 words

Term Definition Paper - Essay Example This paper stresses that the current economic situation affects my organization in the form of lower demands for output because of the financial crunch. While the effect is on the national scale, if not on the global scale, local organizations can feel the effect through decrease in sales due to curbing down on consumption. At times like these when there is recession, organizations face a challenge of coming up with ways in order to boost demand, despite the developing mentality of curbing down on consumption. The inflation rate is determined by the interaction of the aggregate demand—the overall level of demand in the economy, and the aggregate supply—the overall level of output producers are willing to supply in order to meet these demands. An increase or upward shift in the aggregate demand at the same level of aggregate supply causes an increase in inflation rate—also known as demand-pull inflation. This article makes a conclusion that the most important economic indicator which affects my organization is the growing inflation, which is of the cost-push variety that a lot of other countries in the whole world also experience. The cost-push inflation makes the prices of inputs higher, therefore squeezes the profit of the organization. With the challenge of lower demands, the profitability is further worsened. Therefore, my organization faces a challenge to come up with ways in order to improve profitability, either by finding ways to cut down on cost and lessen the higher prices of inputs, or boosting demand and repeat purchase among the customers.