Global Economics Essay Example | Topics and Well Written Essays - 1000 words - 2

globular Economics - Essay ExampleThis paper talks about two big concepts of the global political economy which are Inflation and Economy of Scales. There are various reasons which may lead to increase in costs.The first reason includes the rising costs of imported black materials possibly caused by inflation in nations that heavily rely on exports of these products. Also, a fall in value of a countrys currency in the foreign exchange markets increases the price of imported inputs of that country. The second is the rising costs of labor party this is caused by an increase in salarys which exceed and enhancement in productivity. Labor intensive firms are largely affected by this cause. Firms may not be able to absorb higher wage expenditures thus, they tip over the costs to customers. As a result, the wage inflation increases the price inflation.Thirdly, the imposition of higher verificatory taxes by the government. An example is the increase in the excise duty rate, VAT, stand ard rate or arouse duties. These taxes are charged on manufacturers who, depending on the supply for their commodities and price elasticity of demand, may decide to pass on the tax burden onto consumers.In marketing economies of scale, a bigger firm may pervade its marketing and advertising budget over a great output. It may also buy its raw materials in bulk at discounted prices. In financial economies of scale, financial markets frequently consider bigger firms to be more creditworthy than smaller firms. This enables these firms to access credit facilities at favorable rates.