Effect of Macroeconomic Variables on Supply And Demand of Apple’s Products

This paper discusses the effect of macroeconomic variables such as GDP, inflation and unemployment on supply and demand of Apple’s products. It also discusses how current monetary and fiscal policies in the United States affect the demand and supply of the corporation’s merchandises.

Running head: ECONOMICS FROM A BUSINESS PERSPECTIVE
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Effect of Macroeconomic Variables on Supply And Demand of
Apple’s Products
Memory Mtambo
University of Canada West
Lecturer
MBF 504: Economics from a Business Perspective
16th September 2018

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Table of Contents
Introduction:..............................................................................................................................................3
Sales:...........................................................................................................................................................3
Macroeconomic variable trends:..............................................................................................................4
Impact on Supply and Demand:...............................................................................................................4
Effects of monetary and fiscal policies: ………………………………………………………...5
Conclusion: ………………………………………………………………………………………7
references: ………………………………………………………………………………………..8

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Introduction:
Apple Inc. is an international company whose headquarter is
based in California. The company is a global operation that ships finished
products and component around the world. Apple Inc sells its products to
the small and medium sized businesses including learning institutes, mobile
network service providers, governments, and retail outlets. Apple Inc.
manufactures products in four lines which include computing hardware and
software, iTunes store, watches and mobile devices. The products that the
company sells include iPods, Mac, iPads, Software, iPhones, accessories,
iTunes, and watches. It also sells digital content and applications via App
store, Mac App Store, iTunes Store, and iBooks Store (Inc., 2014). The
following paper will entail the effect of macroeconomic variables such as
gross domestic product (GDP), inflation and unemployment on supply and
demand of Apple’s products. The paper will also discuss how current
monetary and fiscal policies in the United States affect the demand and
supply of the corporation’s merchandises. Lastly, the study will describe how
both macroeconomic variables, as well as monetary and fiscal policies, affect
Apple’s performance.
Sales:
Statista (2018), show Apples income increased from $ 8 Billion in 2004 to 229 in 2017
with 216.76 million phones being sold. The iPhone alone accounts for about 70% apple’s total

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revenue. According to Haslam (2018), macworld results for the 3rd quarter of 2018 show a
revenue increase of 32%.
Macroeconomic variable trends:
Focus economics (2018) shows the trend of macroeconomic variable for US
economy. Data extracted for 2014 to 2017 is as shown in the table below.
2015 2016 2017
GDP($bn) 18.121 18.624 19.391
Unemployment 5.3 4.9 4.4
Inflation 0.1 1.3 2.1
According to the 2008-2018 US inflation calculator, the inflation rate in the US as at July
2018 was at 2.9%. The trend suggest that there the unemployment rate has
reduced but inflation rate has increased over the past three years. The level
of unemployment has reduced from 5.3 in 2015 to 4.4 in 2017. The
implication is that the government is working to reduce the unemployment
rate in the United States. This aspect shows the strengthening of the
economy and implies that there would be strong markets.
Impact on Supply and Demand:
Ideally with the increased and rising Gross Domestic Product over the
past three years, the consumers demand is supposed to improve since an
increase in Gross Domestics Product promotes consumers purchasing power
and their wellbeing. Additionally, the supply of the iPhones is supposed to

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rise because an enhancement in Gross Domestic Product will boost the
production capability of the company due to the availability of cheap inputs.
Increased Gross Domestics Product will mean that many people in the United
States have access to good money. This will also allow them to retain extra
cash after purchasing their basic needs. The surplus amount would allow
them purchase other commodities like the iPhone. This would increase the
supply of Apple Inc. commodities.
The reduction of the unemployment rate suggests that people have
been employed and hence are capable of generating income that would
enable them buy iPhones after obtaining other basic needs. Increased
employment rates also exposes many people to salaries. This would also
increase their disposable incomes. With high disposable incomes, people
always become free to purchase many commodities outside the basics which
would also see increased supply for the Apple Inc. products. Nevertheless, if
the unemployment were rising, then it would imply people have less money,
hence the supply and demand of the iPhones would go down. Nonetheless,
since the rates are down, there would be an increased in the demand and
hence the supply of the iPhones. The disposable income is what affects the
supply of commodities. Employment exposes people to better disposable
incomes but if unemployment is high, then the low demand will lower the
supply due to low disposable income.

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The value of money is very important when it comes to business.
Inflation rate is responsible for the stability of currency. The value of money
allows customers to buy goods at considerable prices which may arouse their
interests in purchasing goods and services. According to the statistics in the
macro-economic variables table, the inflation rate is going up implying that
people can not buy products at considerable prices, and this would auger
negatively on the demand and supply of the iPhones. This confirms what
Haslam (2018) said that iPhone did not meet the target sale of $41.79 million in the
quarter. Although the sales brought in revenue of $ 29.906 billion which is a 20% increase in
revenue year on year the increase in revenue is related to the higher selling price and not the
number of the iPhone. During a season faced with inflation, businesses may make losses because
of less or lack of buying by customers. Customers are not willing to buy because they are not
willing to use a lot of money in buying little commodities.
Effects of monetary and fiscal policies
The US government often use these policies to improve their economy. The
monetary policies are responsible for the regulation of money supply while the fiscal policies
works towards appropriation of taxes and government expenditure levels. The US government
has currently increased its spending steadily in an attempt to boost economic growth. The effect
of this is reduced taxes e.g. for exports. This has there helped Apple Inc. to cheaply access
overseas markets on high demands of their products through exportation thus increasing supply.
Sanchirico, (2016) argues that Apple Inc. is one of the wealthiest businesses in the US and is

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handled with a lot of care as it highly boosts the American economy. It therefore, experiences
insulation from the government when it comes to taxes which see them increase their supplies.
Monetary policies which involve money printing, supply and circulation are very
important for the growth of businesses. The US policies regarding this situation has been very
strict. The strictness especially in the printing of few dollars to circulate around the country has
led to the stabilization of inflation cases. This is the reason why even though, inflation has been
seen to increase, the margin is not so big, hence showing some form of stability. This is very
important for the Apple Inc. this is because they retain the value of their products and may
increase gently. In the case where a company’s product is deemed as valuable, there are high
chances of demand increasing based on value. Increase in demand would automatically increase
the supply of such products and hence the company continues to be profitable. Although, this
company has not reached the target sales of $41.79 million, they are still seen to maintain their
profit margin (Haslam, 2018). This is attributed to the binding monetary policies of money
supply.
Fiscal policies have also been responsible for economic stabilization. Lockamy,
(2017) reports that for a long time, inadequate demands for companies’ goods and services
resulted from the high unemployment rate. These policies are therefore, viewed to be the genesis
of employment when they are smartly adhered to. Due to the fact that in the face of
unemployment, people have less income to buy products, the government finds it inevitable to
intervene. This intervention is in terms of coming up with fiscal policies which promote and
increases employment rates. The provision of job opportunities will then increase many people’s
abilities to purchase the products from Apple Inc. this will then give them the opportunity to
supply more taking into consideration, the increased number of customers.

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Monetary and fiscal policies do not only lead to an improvement in the operations of
Apple Inc. and other businesses, they also have side effects. One effect is that these policies
especially the fiscal taxation fluctuates. Other times there is increased taxation and reduced
government spending, this situation is characterized by loss of jobs which also reduces
disposable income (Figari & Fiorio. (2015). Therefore, customers have not money to buy
products hence the supply reduces and many companies may close as a result. These policies
may also affect the length of business cycles i.e. expansion, recession and recovery. If the policy
implementation that resulted in increased taxes stay for long time, there are high chances that a
business recession time may take long hence leading to closure. This may affect the operations of
Apple Inc. and other business and they may collapse.
Stable macro-economic variables (high GDP, reduced unemployment and low inflation)
combined with better fiscal policies are very important in promoting the growth of a business.
Some of the reasons for this include the fact that many people will be employed. Through their
employment, they will have an access to better disposable incomes which may increase their
willingness and ability to purchase commodities. The second reason is realized with low inflation
(Lockamy, 2017). This will increase the value of money. With this value increase, businesses
will be able to profitably account for their goods and services which would also see them expand
in their operations. Customers on the other hand, will see the benefit of using their money
because the money will be considerable to the commodity purchased. The performance of Apple
Inc. will then be affected either positively or negatively depending on the stability of the
macroeconomic variables and the effectiveness of the policies.
The operations and success of a business organization depends on two main issues.
These issues the economic (monetary and fiscal) policies and the macro-economic variables. The

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government must make sure that their policies are aimed at stabilizing the economy which will
see businesses flourish. Higher unemployment rate may be a factor which may lead to low
demand of commodities. With such low demands, businesses may face a high rate of closure due
to lack of market for their products. The US government has been very instrumental in ensuring
business organizations like Apple Inc. and others are growing economically through their
policies which thrive to act positively to these businesses. They have ensured overseas taxations
have been reduced, employment rates enhanced and expenditure towards sustaining the business
sector increased. With all these improvements put in place, Apple Inc. as a business organization
in the US has been given a platform on which it will further grow.

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References:
Figari, F., & Fiorio, C. V. (2015). Fiscal Consolidation Policies in the Context of Italy's Two
Recessions. Fiscal Studies, 36(4), 499-526. doi:10.1111/j.1475-5890.2015.12074
Bett, M. (2012). Apple Q2 2012 financial result. Macworld. Retrieved from
https://www.macworld.co.uk/news/apple/apple-financial-results-3581769/.
Focus economics (2018) Economic Forecast from the world’s leading economics. Retrieved
from https://www.focus-economics.com/countries/united-states
Haslam K. (2018). Apple Q3 2018 financial result. Macworld. Retrieved from
https://www.macworld.co.uk/news/apple/apple-financial-results-3581769/.
Klimczak, K. (2014). Determinants of demand and Supply. Economics and Sociology, 3(2), 58
Lockamy, A. (2017). An examination of external risk factors in Apple Inc.’s supply
chain. Supply Chain Forum: An International Journal, 18(3), 177-188.
doi:10.1080/16258312.2017.1328252
Mbugua, S. M. (2013). Macroeconomics Determinants of Supply in supply industry. Retrieved
from https://www.focus-economics.com/countries/united-states
OECD (2016). Gross Domestic Product. Available at http://stats.oecd.org/glossary/detail.asp?
ID=1163
Sanchirico, C. W. (2016). As American as Apple Inc.: International Tax and Ownership
Nationality. SSRN Electronic Journal. doi:10.2139/ssrn.2394227
Statista (2018). Global Apple iPhone sales from 3rd quarter 2007 to 3rd quarter 2018 (in million
units). The Statistics Portal. Retrieved from
https://www.statista.com/statistics/263401/global-apple-iphone-sales-since-3rd-quarter-
2007/

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