LARSON INC. SCENARIO OBJECTIVES
1. Review the data provided in the scenario.
The data related to America is that the there is growing level of unemployment at 9.9%, however, the inflation and GDP growth rate are low. In addition, the per capita output is declining from $46,800 in 2007 to $39,560 in 2008. In addition, the Federal Funds Rate and Discount rate are at relatively low rates at 0.25 and 0.50. Compared to Germany at 82.5 million, the population of US is fairly high at 305 million. Further, production machinery and equipment and industrial supplies add up to 58.9% of the exports in 2008. In the US market the cost of producing battery is $110 whereas the markup is 35%, in the German market the cost of producing battery is $135 whereas the markup is 25%.
The current account balance of America is $568.8 billion deficit whereas, the current account balance of Germany is favorable $267.1
In Germany, the unemployment rate is higher at 10.8%, the inflation is low at 1.7%, the GDP is 2.8 trillion, and the main industries include steel, cars and electronics.
2. Discuss one (1) alternative economic future for the industry that might occur in the economy over the next 5 years. Explain the likelihood of the economic futures occurring.
One alternative economic future for the industry that might occur in the economy over the next five years is that the unemployment in the American will drop to levels below 5%, the inflation rate will increase to 6%, the GDP will increase $25 trillion, the output per person will increase to $55,000. and the population will increase to 450 million.
In case of Germany the future for the industry that might occur in the economy over the next five years will be that the unemployment...