• Explain The Effects Of Fiscal Policy On J-LR

I’m going to explain the effects of Fiscal and Monetary Policy on J-LR in terms of the market it operates in.
Fiscal Policy
The advantage of fiscal policy is that it increases consumer spending, the effects includes tax rates decreasing which suggests that J-LR will have more money left as they will be paying less tax therefore the money they save can go towards something new within their business which will increase their businesses potential. This means the lower tax will lead to consumers spending more within businesses therefore businesses such as J-LR will benefit from this particular period of time as they will change their prices to suit the changes. As for interests rates been low is beneficial for J-LR because lower interest make it cheaper to borrow. This encourages spending and investment-LR and other similar businesses tend to increase prices of their products and services when taxes decrease as this helps to increase their sales. Another advantage of fiscal policy is that the government spending increases which then creates a better workforce.
This will then benefit J-LR because apprenticeships will increase resulting in J-LR to employ more young people who will carry out the same duties as previous staff but get paid allot less as there are learning and are apprentices. Also when it comes to employing staff J-LR will not have to waste extra money by using the recruitment and selection process but will have a option of offering apprentices a full time permanent position depending on how they perform throughout their programme.
The disadvantages of fiscal policy is that changes in direct taxes may take allot of time to implement and government spending, as it is difficult to reduce government spending.
Another disadvantage would be that taxes could rise which would cause a problem for J-LR because their consumers will not have enough money to purchase from J-LR due to increase in tax and would create a large impact on J-LR’S sales and could cause major problem for them. Changes in direct taxes or government spending requires allot of time. The main disadvantage of fiscal policy is that it always leads to another problem which can then rise can rise when solving the other. The main disadvantage of fiscal policy for J-LR is that businesses might begin to rely too much from the government and might start to expect more which is a problem for J-LR as there is a limit of the amount of support businesses can receive from the
government.

Monetary policy
Monetary policy could have positive affect on JLR as it creates lower tax rates which can influence customers to purchase cars from JLR, this could benefit JLR as they will increase sales and increase their profit. This also means that customers will be able to pay them back. Monetary policy could also be an advantage for JLR as it will lower the exchange rate which will allow consumers to purchase their cars in countries where the income is low. This will allow JLR to expand further which is ideal for success. The main benefit of monetary policy is the fact it helps to stable prices. With the banks lowering the interest rates on mortgages and loans, J-LR will be encouraged to expand their business as there will be more money available to borrow with interest rates that they can afford. This means that J-LR will receive higher profits as their customers are able to purchase what they want. Also lower interest rates may encourage customers to buy more cars on finance, this means that they will receive a lot of sales from customers who rather pay monthly will is beneficial for the business as they will end up paying more interest,

As everything has a downside the main disadvantages of monetary policy for JLR are the fact interest rates can go up any time which mines this will cause problems for J-LR as rising interest rates impact consumers and J-LR. Therefore J-LR will reduce their investments. Also this will suggest that consumers will find it difficult to take out and pay back loans and would mean they won’t have enough money to purchase from J-LR which is a problem as their sales will decrease.
As interest rates will increase but J-LR will not want to consider expanding which means this will reduce production due to high prices. Consumers might not be able to afford goods and services, and might require allot of time for them to recover. Disadvantages of Monetary Policy for J-LR is that when interest rates increase it will be harder to obtain cheap finance to purchase new cars which means less customers will be able to purchase from J-LR which means their sales will decrease.

In the future I believe the inflation rates will increase over the years because the UK inflation rate rose to an 11-month high in December, with a big rise the falling of food and clothing prices occurred. I believe that inflation rate will increase which will result in prices of raw materials rising and will effect J-LR as their production costs will increase because raw materials will be expensive to purchase. Also the effects of this will be that exchange rates will also increase for businesses and people needing loans will find it harder to get them. Also this will also affect J-LR because inflation reduces consumer confidence and spending which isn’t good for J-LR as they will receive fewer sales. As inflation increases costs and reduces competitiveness, which can lead to falling demand for J-LR. Falling confidence is likely to force J-LR to lay back on their investments.