Share
Explore BrainMass

Economics indicator for starburcks

Depth analysis of economics indicators in how they can impact Starbucks.

Prime interest rate or federal funds.

housing stars

Auto Sales

Foreign exchange rate

producer price index

oil and fuel prices

arround 875 and 900 words

Solution Preview

Prime interest rate or federal funds:

Prime interest rate is an important indicator for Starbucks because this rate directly affects other rates such as directly influences other short-term interest rates, such as deposits, bank loans, credit card interest rates, and adjustable-rate mortgages.

Reference: http://useconomy.about.com/od/criticalssues/tp/Current_Fed_Interest_Rates.htm

Change in the prime interest rate has major implications on the economy. "A decrease in the federal funds interest rate stimulates economic growth, but an excessively high level of economic activity can cause inflation pressures to build to a point that ultimately undermines the sustainability of an economic expansion. An increase in the federal funds interest rate will curb economic growth and help contain inflation pressures, and thus can promote the sustainability of an economic expansion, but too large an increase could retard economic growth too much."

Reference: http://www.econmodel.com/classic/terms/fedfunds.htm

Therefore, businesses like Starbucks are affected by increase or decrease in the federal funds rate as movements in such rates affect the overall economy. Federal government adjusts such rate to stimulate or put curb on growth and thus, movements in such rates affects ...

Solution Summary

Depth analysis of economics indicators in how they can impact Starbucks.

$2.19