How Inflation Affected Ford Motor During the 2007-2009 Recession Essay

How Inflation Affected Ford Motor During the 2007-2009 Recession - Essay Example The damans of the machinery from FORD MOTOR decreases and hence the company cannot sustain a large number of workers. The table below shows how the recession affected the employment in FORD MOTOR and other companies in America. As a result of inflation and reduced purchasing power, the entire income raised by households is spent on necessities. As such, there is little disposable income to invest in shares. This is seen when the number of outstanding shares of the FORD MOTOR gradually increased as a result of decreased demand during the recession as shown in the table below: When real income falls below potential income due to a recession, FORD MOTOR laid-off workers, so the unemployment rate goes up and hence households earn less income. The cyclical unemployment rate increases during recessions as FORD MOTOR could not raise sufficient revenue to sustain a large number of workers.