Macroeconomics: principles and applications

Macro-Economics

Macro Economics

There are numerous issues that governments must refer to when developing the strategy that the budget must be based on. Such issues are represented by fiscal and monetary policies. Fiscal policy is represented by the strategy developed by the government regarding the expenditure and revenue collection that are intended to be used as instruments of economic influence by the state. The most important objectives of the fiscal policy is to determine a situation of economic stability that can be reached by the control of interest rates and spending of the government. These objectives can be reached by fiscal policy instruments like government expenditures and taxation.

The government can influence the country's economic situation by modifying the level and composition of taxation and expenditures. There are numerous effects determined by this strategy (Rittenberg & Tregarthen, 2012). The most important effects on the economic situation can be represented by modification of the demand, resource allocation, the distribution of income, economic activity, government budget, and others.

Monetary policy is represented by the strategy developed by monetary activities in order to control the supply of money in the country. The objective of the monetary policy is to determine a stable and developing economic situation. This objective is reached by influencing interest rates. The monetary policy is used in order to determine stable prices, and reduced unemployment. Monetary policies can be expansionary or contractionary.

Expansionary policies are developed in situations characterized by recession when countries try to reduce unemployment. In such cases, governments must reduce interest rates in order to make it easier to get credits, which is intended to help companies expand their business, and to help individuals purchase more products and services. Contractionary policies are developed in situations where governments are trying to reduce inflation.

2. Some of the most important specialists in the field are John Maynard Keynes and Friedrich Hayek. Keynes and the specialists that support his theories consider that the government should focus on the fiscal policy in its attempt to influence economic stability (Weil, 2008). In the Keynesian opinion, fiscal policies can be used in order to counteract the effects of economic recessions and depressions. In addition to this, the Keynesian theory recommends that the level of economic activity is determined by aggregate demand. In his opinion, inadequate aggregate demand is likely to determine high levels of unemployment. It seems that the Keynesian theory was favored by capitalist governments. The importance of the Keynesian theory is also revealed by the economic crisis.

However, the theory developed by Hayek is opposed to the theory developed by Keynes. The theory developed by Hayek states that GDP growth is significantly influenced by the efficient allocation of capital. In addition to this, the theory also refers to the fact that interest rates can be influenced by monetary authorities. In Hayek's opinion should be established based on the relationship between consumption of goods and capital stocks. This allows making strategies that must focus on the consumption of goods.

It is obvious that the theories developed by Keynes and Hayek present different views on the strategies that government must develop. However, it is not recommended to think that these theories are incorrect. They must be analyzed in different contexts. These theories can be appropriate in the case of certain countries with certain levels of economic developments, but they can be inappropriate in the cases of other countries. It is important to determine how these theories can be applied in the case of each country.

3. The Federal Reserve focuses on the operations of the Federal Open Market Committee in order to influence the money supply and interest rates. These operations are represented by purchases and sales of U.S. Treasury and federal agency securities that are used in implementing the monetary policy. The objective of these operations is represented by reaching certain quantities of reserves or certain levels of prices. The Federal funds rate is the interest rate established by the Federal Reserve in situations where depositary institutions lend balances to other institutions (Federal Reserve, 2012). This instrument is used by the Federal Reserve in order to improve the stability of prices and the sustainability of economic growth.

There are also other instruments used by the Federal Reserve in its attempt to influence the money supply. Such an instrument is represented by reserve requirements. These reserve requirements are the amount of funds that must be held by depositary institutions in comparison with deposit liabilities. Federal Reserve Banks establish the reserve ratios determined by the Federal Reserve. The most important objective of strategies based on reserve requirements is represented by increasing the control of the Federal Reserve on the country's money supply.

The discount rate is another instrument used by the Federal Reserve that is intended to establish the interest rate of loans received by commercial banks from different Federal Reserve Banks. This strategy allows the Federal Reserve to influence interest rates that these banks used in their products and services provided to their customers.

4. a) This is neither fiscal or monetary policy. It refers to the health situation of certain categories of the population, but it does not involve modifications in the level or taxes and money supply. If this strategy leads to increased resource allocation towards reducing childhood obesity, it can be considered fiscal policy.

b) This is a fiscal policy instrument because it refers to budget expenditures, and resource allocation. The modification of the budget of different authorities represents a fiscal strategy.

c) This is neither fiscal or monetary policy. The requirements have important effects on the country's automobiles market but they are not determined by modifications of taxes and money supply.

d) This is fiscal policy. This is because agriculture subsidies provided by the federal government represent budget expenditures. This is a resource allocation issue that is determined by fiscal policy.

e) This is also a fiscal policy instrument. The objective of this plan is to increase employment, which is characteristic to monetary policies. However, the strategy used in order to reach this objective is fiscal.

f) This measure refers to national security and public health. Therefore, this is neither fiscal or monetary strategy. The fact that is determines modification in budget allocation does not mean that its objective is fiscal.

g) This is a fiscal policy measure because it refers to taxes. The tax deductions discussed by this strategy refer to the collection of taxes, which makes this a fiscal policy.

h) This is a monetary policy. This is because it refers to the interest rate which is included in the monetary strategy of the Federal Reserve.

i) This is another monetary policy issue because it refers to interest rates and their modification, which is characteristic to the monetary policy.

j) This is a monetary strategy. In addition to this, it refers to operations of the Federal Open Market Committee that are important instruments of the Federal Reserve.

k) This can be considered a fiscal policy because it refers to taxes. This is characteristic to fiscal policies.

Reference list:

1. Rittenberg, L. & Tregarthen, T. (2012). Principles of Macroeconomics. Retrieved May 18, 2012 from http://catalog.flatworldknowledge.com/bookhub/reader/2728?e=rittenmacro-ch12.

2. Federal Open Market Committee (2012). Federal Reserve. Retrieved May 23, 2012 from http://www.federalreserve.gov/monetarypolicy/fomc.htm.

3. Weil, D. (2008). Fiscal Policy. The Concise Encyclopedia of Economics. Retrieved May 23, 2012 from http://www.econlib.org/library/Enc/FiscalPolicy.html.

McDonald's and Macroeconomics

Company Presentation

McDonald's Corporation is one of the most famous brands and the world's largest chain of fast food restaurants. The company was established in 1940 and has been expanded to 119 countries. There are certain interesting facts about McDonald's that make this company a good example that can be analyzed in this macroeconomics class. This is because McDonald's restaurants can be developed and managed by franchisees, affiliates, or by the corporation. This means that there are numerous financial strategies used by the company in accordance with the type of ownership of each restaurant.

The most important items in the company's menu include hamburgers, cheeseburgers, chicken, French fries, soft drinks, shakes, and desserts. The company's success can also be attributed to the fact that its managers understand customers' needs and preferences and are interested in adapting the company's products to these preferences. Therefore, the company also provides salads, wraps, smoothies, and others.

It is important to understand the different sources of revenues that McDonald's benefits from. The company's revenues are determined by rent, royalties, fees that the company's franchisees must pay, sales, and others (Annual Report, 2011). It seems that the company is not significantly influenced by the crisis. This is because its revenues have increased by 27%, reaching $22.8 billion. Its operating income increased by 9%, reaching $3.9 billion.

Big Ideas and McDonald's

Some of the most important issues in macroeconomics that companies must take into consideration refer to business cycles and how they are influenced by the economy of the country and by the fiscal and monetary policies developed by the government. In accordance with this idea, each economic sector and company have expansion, recession, and peak periods. In other words, these companies expand their business, reach a peak in their business activity, and then go through a period of recession, followed by a period of business expansion, and so on.

It is important that companies understand that the economic sector they represent follows the same business cycle. Therefore, it is difficult for companies to expand their business during periods of recession in the economic sector they represent. But they can expand their business during recession periods of other business sectors, represented by products from indirect competition. This situation can be observed in McDonald's situation.

This can be an explanation of the fact that the company's sales have significantly increased during the crisis. The incomes of most people have been reduced, which means that their purchasing behavior has modified. In such cases, people usually spend less. This means that they purchase less, or they purchase cheaper products. In the case of the restaurants industry, it is obvious that these people cannot afford to eat out in traditional restaurants as much as they used to before the crisis. McDonald's provides a cheaper way of eating out. The smaller prices of the fast food chain in comparison with traditional restaurants have attracted the customers that cannot afford to eat in such restaurants. This situation has determined the sales of McDonald's to increase.

Another idea refers to employment and its influence on the fiscal and monetary policies. Some of the government's strategies are oriented towards reducing unemployment. The level of unemployment determines the government to focus on measures that stimulate jobs development. Such measures refer to modifying interest rates in order to control the money supply and to increase employment levels. The level of taxes can also be influenced by these measures. This is an important issue that affects the activity of McDonald's. If taxes increase, the company's profits are likely to reduce.

Financial Evaluation

The analysis of the financial situation of McDonald's reveals the fact that this is a profitable company. The company's revenues have increased by 27%, reaching $22.8 billion. Its operating income increased by 9%, reaching $3.9 billion. This reflects the fact that McDonald's is characterized by a strong financial situation that allows the company to expand its business.

Other indicators that can reveal the financial situation of the company is represented by its recruitment and selection process. In other words, if companies are hiring employees it means that they are developing, they are expanding their business, and their increased incomes allow them to hire people. If companies are reducing their number of employees, this situation reflects the fact that incomes are reduced and the company in case is not able to pay the salaries of their employees.

In the case of McDonald's it is difficult to make evaluations based on this indicator. This is because the different types of ownership do not allow to develop a correct idea of its human resources situation. The situation of McDonald's franchisees and affiliates does not reflect the situation of the corporation owned restaurants. It is important to establish the evolution of the human resources in the restaurants owned by the company, and not in those owned by its partners.

Reference list:

1. Annual Report (2011). McDonald's. Retrieved May 23, 2012 from http://www.aboutmcdonalds.com/mcd/investors/annual_reports.html.

Macroeconomic Indicators

1. GDP

Consumer spending = $1,000

Government expenditures = $300

Investments by industry = $150

Excess of exports over imports = $200

GDP formula:

GDP = consumer spending + government expenditures + investments by industry + excess of exports over imports

In this case, the GDP = $1,000 + $300 + $150 + $200

GDP = $1,650

2. If the domestic energy production is increased, this leads to reduced oil imports from other countries. In this case, the excess of exports over imports increases, which means the GDP increases with this number.

Inflation

1. CPI1 = 100

CPI2 = 104

Rate of inflation formula:

Rate of inflation = ((CPI2-CPI1)/CPI1)*100

In this case, the rate of inflation is:

Rate of inflation = ((104-100)/100)*100

Rate of inflation = 4%

2. CPI1 = 231

CPI2 = 234

Rate of inflation = ((234-231)/231)*100

Rate of inflation = 1.2% or 0.012

Unemployment rate

1. Total workforce = 20,000

Unemployed people = 2,000

Unemployment rate = (number of unemployed people / number of people in the civilian workforce)/*100

In this case, unemployment rate = (2,000/20,000)*100

Unemployment rate = 10%

2. Total workforce = 20,000

Unemployed people = 2,000, of which 500 are not looking for work. Unemployed people must be looking for work in order to be considered unemployed. In this case:

Unemployed people = 2,000 -- 500 = 1,500

Unemployment rate = (number of unemployed people / number of people in the civilian workforce)/*100

In this case, unemployment rate = (1,500/20,000)*100

Unemployment rate = 7.5%

International Economic Trends

1. Output and Growth real GDP

In 2008, the UK had the highest increase in the real GDP, followed by Canada, the U.S., and Japan. The crisis has affected these countries that reported significant changes in their GDP. In other words, their GDP has reduced in 2009 in comparison with 2008. Therefore, in 2009 the highest GDP reduction was reported by Japan, followed by the UK, the U.S., and Canada. The most important changes between 2009 and 2008 were reported by Japan and the UK. The smallest change was reported by Canada. In 2010, Japan had the highest GDP increase, followed by Canada, the U.S., and the UK. In other words, Japan had the most important recovery from the crisis. In 2011, Japan has reported the most important reduction of GDP. The highest GDP increase was reported by Canada, followed by the U.S., and the UK.

2. Inflation and prices

In 2008, the highest increase in the consumer price index was reported by the U.S., followed by the UK, Canada, and Japan. In 2009, the CPI has significantly reduced in the case of these countries (Economic Research, 2012). The most important reduction can be observed in the case of Japan. The smallest CPI reduction was reported by the UK. Canada and the U.S. have reported CPI reductions similar to that of Japan. In 2010, the situation improved a little in the case of these countries, because they were able to increase their CPI. However, their progress was significantly influenced by their CPI in 2009. Therefore, in 2010 Japan reported the highest CPI increase. The UK reported the highest CPI increase. Canada and the U.S. have reported CPI increases slightly smaller than that of the UK.

3. Labor markets

In 2008, Canada was the country with the highest employment rate. Japan had the smallest employment rate. The U.S. And the UK has a slightly higher employment rate in comparison with that of Japan. It seems that the employment rate of these countries was affected in 2009 by the crisis. In this case, the U.S. had the most important employment rate reduction, followed by the UK, Canada, and Japan. The situation has improved in 2010. The highest increase in the employment rate was reported by Canada. The U.S. And Japan have reported smaller employment rate increases. The UK reported the smallest employment rate increase. In 2011, the employment rate in Japan has significantly reduced, but the employment rate in Canada, the U.S., and the UK were not significantly affected.

Treasury bonds

1. The differences in rates among these bonds are determined by maturity risk premiums and liquidity risk premiums. The risks associated with treasury bonds increase in accordance with the time they must refer to. In other words, it is difficult to determine the liquidity of the country in longer periods of time.

2. The false statement is:

a) the default risk premium is applied to all bonds including U.S. Government ones.

This is because the U.S. Government does not pay such default premiums.

3. The inflation premium that should be required by investors is:

Inflation premium = nominal rate -- real rate + risk premium

In this case, the inflation premium = nominal rate -- 4%

4. In case the inflation rate is 0%, the yield curve is likely to have a constant slope because of the constant level of inflation.

Reference list:

1. International Economic Trends (2012). Economic Research. Retrieved May 24, 2012 from http://research.stlouisfed.org/publications/iet/.

McDonald's and Macroeconomic Indicators

1. The selected company is McDonald's and it provides fast food products in a large chain of restaurants. In order to understand how these macroeconomic indicators affect the performance of the company, it is important to take into consideration the fact that the indicators in the U.S. must be analyzed with the indicators of some of the most important countries that McDonald's has opened restaurants in.

The indicators used in this analysis are represented by GDP, CPI, and unemployment rates. These are some of the most important indicators that can provide a correct idea of the national economy of different countries, and that can have significant effects on the activity of companies in these countries. In other words, such indicators and their evolution can significantly influence the strategy developed by these companies.

In the case of McDonald's, the crisis that has affected the countries in which the company develops its activity also influenced the performance of the company. It seems that McDonald's was favored by some of the changes in these macroeconomic indicators. The real GDP has been reduced as a result of the crisis. This has important effects on the population's incomes, which have also been reduced. This means that the customers targeted by McDonald's are likely to purchase less. This leads to reduced profits for McDonald's. But the crisis has also reduced the incomes of people that normally went out to eat at traditional restaurants. Their reduced incomes do not allow some of them to go to traditional restaurants, so they prefer to go to cheaper fast food chains like McDonald's. Therefore, this leads to increased profits of the company.

The consumer price index is another macroeconomic indicator that has an important influence on the activity of McDonald's. The CPI reveals the evolution of prices in the U.S. economy. Same as in the case of the GDP, the CPI has been affected by the crisis. Therefore, prices have increased, with important effects on consumers, companies, and the country's economy. The evolution of the CPI reveals the fact that during the crisis the purchasing power of most customers has been reduced. This means that they purchase less, or that they purchase cheaper products. Regarding companies, this means reduced sales, smaller profits, and reduced opportunities of development.

The unemployment rate is another important indicator that companies like McDonald's must take into consideration. The evolution of the country's workforce also influences the strategy developed by companies in their attempt to attract candidates for their jobs. This seems to favor some of these companies. Higher unemployment rate means that more people are looking for jobs. This leads to increased competition in the recruitment and selection process.

This situation allows companies to increase the standards of their jobs. They can offer smaller salaries because people are forced by this situation to accept working conditions that they normally would not accept. This situation in the workforce determines employees to improve their performance with minimum motivation from these companies. Therefore, companies can reduce the costs of their human resources. This allows them to make investments in other activities that require resource allocation.

2. The Federal Reserve has the ability to significantly influence the activity of companies in the U.S. The most important objective of the Federal Reserve is to control the money supply in the market in order to provide stability and sustainable development (Federal Reserve Bank of New York, 2012). Other objectives of the Federal Reserve refer to reducing prices, reducing unemployment, and stimulating the activity of companies. In order to reach these objectives, the Federal Reserve usually modifies the level of interest rates.

If the Federal Reserve decides to increase the interest rates, McDonald's and its activity can be significantly affected. This is because the prices they pay to their suppliers are likely to increase. The prices of raw materials used in producing the food would increase, determining the company to increase prices or to invest in other strategies intended to increase sales. In other words, the company's sales would significantly reduce.

If the Federal Reserve increases interest rates, the profitability of McDonald's can be affected. In the case of reduced sales, the profits of the company are also reduced. This forces McDonald's to reduce its production costs or to increase its prices. In such situations, it is not likely that production costs can be reduced. The outsourcing process is one of the most important strategies that companies can use in order to reduce their production costs. But in the food industry it is difficult to outsource the production of the food produced by the company. Therefore, in case the Federal Reserve increases interest rate and its sales reduce, the company is determined to increase the prices of its products. This can also lead to reduced sales. Therefore, the Federal; Reserve's strategy of increasing interests rates is not favorable in the case of McDonald's. The company's partners are also affected by the same problems. This means that they must increase the prices of the products McDonald's purchases from them. This leads to increased costs for McDonald's production, determining the company to increase the prices of their products.

Reference list:

1. The Yield Curve as a Leading Indicator (2012). Federal Reserve Bank of New York. Retrieved May 24, 2012 from http://www.newyorkfed.org/research/capital_markets/ycfaq.html.

Macro Economics

1. The government has several sources of revenues for its budget. The most important sources of revenues are represented by individual income taxes, social security taxes, and corporate taxes. The most important source of revenue for the federal government's budget is represented by individual income taxes. The income tax is a tax applied on the income of individuals. In this case, certain deductions are allowed in accordance with certain standards that tax payers must reach. Such taxes are usually collected on a pay-as-you-earn basis. The corrections in such cases are performed after the end of the tax year.

There are several forms that these corrections can be performed in. In case the taxpayer did not pay enough during the fiscal year, the taxpayer must pay the necessary sums of money to the government. In case the taxpayer paid too much during the fiscal year, the government refunds the necessary sums of money. The important issue about this type of taxes relies on the fact that deductions can be performed by reducing the income that must be taxed. The relative importance of individual income taxes is of 47% of the total federal tax revenues.

Social security taxes represent another important source of revenue for the federal budget. These taxes are applied to the wages of employees and self-employed persons (U.S. Government Revenue, 2012). Employees and employers must each pay half of the social security tax. Self-employed persons must pay the entire amount of the social security tax. The relative importance of social security taxes is of 36% of the total federal tax revenues.

Corporate income taxes are another source of revenue of great importance to the federal budget. These taxes apply to the income or capital of companies doing business in the U.S. In addition to this, the corporate tax is applied to the property of these taxes. The relative importance of corporate taxes is of 8% of the total federal budget revenues.

2. The most important categories of expenditures of the federal budget are represented by Medicare and Medicaid, social security, and the Defense Department. Healthcare spending is an important category of expenditures in the case of the U.S., same as in the case of most countries. The level of countries' development is revealed by their interest in investing in the healthcare system.

However, the increased investments in the healthcare system reveal the fact this system is not correctly organized. In the case of the U.S., the healthcare spending represents the highest level of expenditures. This means that the country's government understands that this is one of the most important problems of the country. The relative importance of the healthcare expenditures is of 24%.

Another important category of expenditure is represented by social security. The increased level of unemployment as a result of the crisis has significantly reduced revenues from social security taxes, leading to increased expenditures. The crisis has also affected most companies that were forced to reduce the salaries of their employees. This has reduced revenues from this source. Therefore, the government had to modify its resource allocation strategy in order to address increased social security expenditures. The relative importance of the social security category of expenditures is of 20%. The federal budget must ensure that the healthcare system benefits from the necessary resources.

The expenditures with the Defense Department represent another important category of the federal budget. This type of expenditure and its funds are allocated to veteran expenses, Department of Homeland Security expenses, war expenses, and others. The relative importance of this category of expenditure is of 19% of the total federal budget expenditures.

3. There are numerous commission recommendations intended to help reduce the budget deficit of the country. Some of these recommendations seem to understand the problems that caused the budget deficit and to address these problems in the attempt of correctly reducing the deficit. Other recommendations seem to not be developed based on the problems that determined the budget deficit. Therefore, they are not likely to be able to help reduce the deficit. There are also certain interesting recommendations, but that do not have the ability of producing important effects regarding the size of the budget deficit.

The recommendations I agree with the most are represented by reducing deductions and increasing the fees of the National Park Service. I think that reducing deductions is an important recommendation that can help reduce the federal budget deficit because not all expenses should be deducted. There are certain categories of expenditures that do not require such deductions. The possibility of tax deduction also increases the tax evasion activity. Therefore, I think this recommendation can help reduce tax evasion, which can lead to reduced budget deficit.

The National Park Service expenditures are another category of expenditures in the federal budget that has important effects on the deficit. In my opinion, certain levels of taxes should be associated with this service. This is because people that want to benefit from this service must pay for it. The management of this park is expensive. Therefore, the fees associated with this service are necessary in reducing the budget deficit.

The recommendations I disagree with the most are represented by increasing the gas federal tax, and increasing the upper limit of income for social security taxes. If the gas federal tax increases, this can lead to increased prices in most products and services. Therefore, it is likely that increased prices can significantly reduce consumption. This leads to reduced tax collection, which increases the budget deficit (Fried, 2010). Therefore, this measure is not likely to have important effects on reducing the budget deficit. The other recommendation that I do not agree with is represented by increasing the upper limit on taxable income. This means that an increased size of individuals' income will be taxed. This leads to reduced incomes of these individuals. This also leads to reduced consumption. Therefore, tax collection is likely to be reduced, leading to increased budget deficit.

4. a. Aggregate demand is represented by all demand in the economy, like expenditures on consumer products and services, and investments. Aggregate supply is represented by the value of all goods and services produced in a country, plus the value of imported goods, and less the value of exported goods. The equilibrium point is a situation where aggregate demand is equal with aggregate supply.

B. In case the government reduces the budget deficit by reducing expenditures, it is obvious that the leads to reduced aggregate demand. This leads to reduced interest from investors. This is because investors are attracted by countries with increased aggregate demand. If the government reduces aggregate demand, the markets in the country are likely to present reduced opportunities for investors. Therefore, the level of investment can reduce, affecting the tax collection level.

C. In case individuals decide that they should reduce their spending and use their money in order to reduce their debt, it is likely that this can lead to reduced aggregate demand. This is because if consumption is reduced, the aggregate demand reduces also. If the aggregate demand reduces, companies must react to this situation by reducing the aggregate supply.

D. In the situation where the government offered money to different categories of individuals in the car program, the car demand has increased, leading to an increased aggregate demand. As a result, companies reacted to this situation by increasing the aggregate supply.

5. The economic situation in the U.S. is influenced by numerous factors. Such an important factor is represented by the unemployment rate. In order to improve the economic situation it is important that companies produce and individuals purchase. But with an increased unemployment rate it is difficult to increase consumption. This influences the activity of companies that must produce less because the demand for their products and services is reduced. The reduced activity of these companies leads to reduced tax collection levels. The government has tried to reduce the unemployment rate, but the results of the numerous strategies intended to reach this objective were not as efficient as established.

However, there are certain recommendations that must be taken into consideration by the government and by the President. I order to reduce the unemployment rate it is important to create jobs. These jobs are mostly created by companies. This means that companies must invest in creating jobs. But certain companies cannot invest in creating jobs because their profits are not sufficient in order to develop such a strategy. Therefore, the government should support these companies in creating jobs. This objective can be reached by reducing the taxes associated with their income, by reducing gas taxes, and by reducing the social security taxes. This helps motivate companies to create jobs that lead to increased production of these companies. This leads to increased sales, and increased level of taxes collected by the government. It is important to helping companies create jobs, because this helps them improve their productivity.

Reference list:

1. Federal Budget Analysis (2012). U.S. Government Revenue. Retrieved May 25, 2012 from http://www.usgovernmentrevenue.com/federal_budget_estimate_vs_actual_2012.

2. Fried, C. (2010). Deficit Reduction Proposals: What They Could Mean for You. Retrieved May 27, 2012 from http://www.cbsnews.com/8301-505123_162-41141567/deficit-reduction-proposals-what-they-could-mean-for-you/?tag=mwuser.

McDonald's and the Federal Budget

1. Companies are affected by the budget proposals and strategies developed by the government. But companies also have the ability to influence the government in modifying this strategy by developing an important lobby activity. McDonald's is an important company with important effects on the economy and on the budget. Therefore, it is likely that the budget strategies lobbied by the company can influence the decisions of the government regarding the budget.

There are certain issues that can be addressed by the government in order to help McDonald's. The objective of the company is to reduce its costs and to increase its incomes. This objective can be reached with the help of the government and the measures it addresses regarding its fiscal strategy. Therefore, in order to help the activity of McDonald's, the government can reduce the taxes applied to companies. This refers to the number of taxes, but also to their level. Most companies do not agree with the taxes collected by the government. In their opinion, these taxes are too high in comparison with the economic conditions in the country.