Assignment about Define Macroeconomics

Running head: MACROECONOMICS
Macroeconomics
Name of the Student
Name of the University
Author note

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EXECUTIVE SUMMARY
The aim of this study is to analyse a new product launch by a US firm for reviving its ailing
business. Here, the new product launch such as electric vehicle by the Ford is analysed. In order
to revive the performance of the company, Ford shifted its focus from ailing gasoline based
vehicles to electric vehicles. This paper examines the effects of the GDP, foreign exchange,
aggregate demand, unemployment, aggregate supply and inflation on the new product. This
paper also emphasizes on the effects of the new product on the trade, productivity and economic
growth of the US.

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Table of Contents
Introduction......................................................................................................................................3
Interaction of resources between government, households and business....................................4
Scarcity, price elasticity, foreign exchange, gross domestic product (GDP) and market
mechanisms..................................................................................................................................6
Productivity and trade................................................................................................................10
The business cycle, unemployment and inflation......................................................................12
Keynesian and Classical economics and aggregate demand and supply...................................15
Conclusion and outcome................................................................................................................16
References......................................................................................................................................18

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Introduction
Ford Motor Company is one of the largest multinational automakers of the United States
on America (USA) (Ford.com, 2020). It is also known as Ford. Moreover, headquarter of the
company is situated in a suburb of Detroit named Dearborn of Michigan. It was established in
16th June 1903. The products offered by the company are commercial and automobiles vehicles
and luxury cars. The commercial and automobile vehicles are sold under the brand Ford. In
addition, the brand under, which the luxury cars are sold is Lincoln. The organization also
possesses shares in other companies such as Aston Martin, Troller and Jiangling Motors. It was
second best performer in the US automobile market after the General Motors in 2015 (Noori &
Tatari, 2016). However, higher market competition and various economic issues lowered the
profit level and share price of the company. As a result, it slashed global workforce in order to
solve the problem of the declining profit level. To enhance the earnings in 2018, it went through
a cost cutting measure, where it planned to reduce cost by 3 billion US dollars.
Furthermore, it also planned to curtail cost of salaried workforce by almost 10% in North
America and Asia. On 25th April 2018, the decreasing profitability and demand of the passenger
cars forced the company to discontinue its passenger cars in the market of the North America
over the next four years. However, the service of the Mustang was only continued in the North
America market (Yang et al., 2016). As of 2018, the company generated revenue of 160.33
billion US dollars. Thus, the company also shifted its focus towards the emerging market of the
electric vehicles to increase profitability and market share in the industry. Electric vehicle
industry is one of the vital industry of the automobile sector. The vehicles produced under the
electric vehicles are powered with electric motors. Thus, these are not gasoline based vehicles,

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which helps to save energy and reduce the greenhouse gas emission in the environment. Ford
planned to launch an all-electric SUV by 2021 named Mustang Mach-E.
Interaction of resources between government, households and business
Government took several initiatives for the development of the electric vehicle industry.
Government of USA provided financial aid for the mobility industry of the USA, which in turn
helped the economy of USA to recover (Usa.gov, 2020). The sale of the plug-in electric vehicle
(PEV) had quadrupled from 2012 to 2017. As of 2017, the market share of the PEV stood at just
one percent. Electric vehicles are more environment friendly as the level of greenhouse gas
emission is much lower than the non-electric vehicles. However, there are various limitations of
the electric vehicle car, which set off its advantages. These are high initial costs and restricted
battery range. To increase the market share of the electric vehicles, manufacturers adding new
models into the electric vehicle sector.
The electric vehicle market of the US is dominated by the Tesla Inc. it is the single
largest manufacturer of the electric vehicle in the US. In 2018, the PHEV sales were 122.1
thousand units. Moreover, the growth of the PEV sales in the US was 79% in 2018
(Tradingeconomics.com, 2020). Though, Ford stood 10th on the list of the top electric vehicle
manufacturers of the US in 2018. By 2005, the company may become the second largest electric
vehicles manufacturers of the US (Cano et al., 2018). The company invested a large amount in
the research and development segment of the electric vehicles sector in recent years. In addition,
the amount of invested was maximum in expanding its fleet of electric vehicles. In 2018, one of
the model of the Ford, which placed top ten in the bestselling PEVs of the USA was the Ford
Fusion Energi.

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The new addition of the Ford in the electric vehicle family is Mustang Mach-E. It is new
version of the Mustang. The electric vehicle will be able to target 0-60 mph in the mid-3 second
range. It is an all-electric SUV. The electric and hybrid vehicles offered by the Ford loaded with
many advanced features. The main feature of this range is advanced fuel saving technology. The
fuel saving technology make it special and attractive to the customers. The Mustang Mach-E is
also featured with zero emission, which is a major step for the environment. Therefore, use of
this vehicle will be environment friendly (Hall & Lutsey, 2017). Therefore, this vehicle will also
provide many other benefits to the customers. It will serve the customers in a better way in order
to meet many customer’s demand. There exists rear and front motors to channelize power to all
the individual wheels. Thus, it increases the capability and provides easy handling system. Thus,
the electric vehicle can also perform in the snowy roads. One of the main feature that attracts the
customers is luxury of space. It is the most important feature in order to make the ride better and
comfortable. The interior of the car is impressively spacious with plenty of legroom. The vehicle
will provide next level driving experience to the customers. Other features that it offers are smart
technology, thoughtful amenities, modern design and enhanced fuel economy.
Several incentives are offered by the US government to improve the market of the
electric vehicles. Thus, it would be profitable for the automakers to launch electric vehicles in
presences of these offers. Moreover, for the sales of the first 200,000 electric vehicle, automakers
would get a subsidy of a tax credit for consumers from $2500 to $7500 (Jenn, Springel & Gopal,
2018). The cap is already hit by the Tesla. Ford took various initiates and will also launch new
electric vehicles in order to reach that cap and to get the tax benefit provided by the US
government. It also led to the surge in sales of the electric vehicles in the US mobility market. It
is estimated that there will be 18.7 million electric vehicles by 2030 on US roads. The main