Difference between state socialism with central planning and market socialism.

Sample Solution

State socialism with central planning is a system where the government owns and controls most of the means of production and makes decisions about what to produce, how much to produce, and for whom it should be produced. An example of this type of system is North Korea. In socialism with central planning, everything that people produce is considered a social product. Unlike socialism with central planning, market socialism adopts certain aspects of capitalism like private ownership or consulting market demands. One example nation that follows this model is China. The main difference between these two systems lie in their approach towards allocating resources; while state socialism relies heavily on bureaucratic decision-making processes, market socialism utilizes more decentralized methods such as supply-and-demand (Hoffman et al., 2020).

Recession is the period of temporary economic decline during which trade and industrial activity is reduced, this is usually understood, when the GDP has a fall in two successive quarters. The UK economy is expected to hit recession in the next few years, due to the decision to leave the E.U. This then effects loans and investments, as the money put into the business, will have a different worth. Economic recession is, however, the general economic decline, which is usually shows in the stock market, this leads to the increase in unemployment and the decrease in housing market. Recession has a negative effect on Jaguar, as sales and profits results to a decrease in sales and increase in costs. Economic boom is when the business is on an expansion and reaches the peak point of the business cycle. This occurred in the first months of the decision to leave the EU, as the amount of the goods and services produced, increase for the preparation of leaving. The economic boom is the period where costs is low and sales is high, which is the best period of all businesses, due to the opportunity of profit. In this period this means that sales of Jaguar cars will increase, so employee numbers ad profits will grow.

Monetary

The monetary policy is the process by which the monetary authority of a country. Typically, the central bank which is the Bank of England controls the costs of borrowing short-term or the monetary base. When doing this they often target inflation rate or interest rate to ensure price stability and general trust in the currency. As of May 2018 £1 is currently equal to 1.13 euros. This is a continuous decrease since the announcement of “Brexit” when it dropped to the lowest point in many years. The inflation rate is 2.5% despite the current target being 2%, this means it is slightly higher than the government prefers it so stay which poses the risk for Jaguar’s potential level of sales, this is because customers may be reluctant to spending, due to the high costs. The interest rate at the bank of England is currently 0.5%. When the interest rates are low this is good for Jaguar Land Rover (as they can borrow and expand more quickly) as well as their customers because they will be less likely to save and more likely to invest in purchases such as cars. L