Inter-Workings of the Economy

There is four-phase of the business cycle that affects economic fluctuations. One is the
expansion phase, where there is rapid growth in the economy. The second phase is the peak
where the development has reached its maximum. The third stage is contraction, where the
growth starts to diminish. In the last step of the trough, the economy has reached the lowest
growth rate. The fluctuation will affect the sale of smartphones as the price will differ in the
different stages.
The unemployment level affects the income level. When there is high unemployment in
the economy, there is less income disposal (Howard, 2021). That implies that people can only
afford basic needs such as food, clothes, and shelter. There is less or no income left to purchase
phones. Affordability of the phones becomes an issue when there are high levels of
unemployment.
The labor participation rate is the measure of the workforce in the economy that is active.
The current labor force participation rate in the United States stands at 63.3% (Howard, 2021).
That includes all the individuals in the working force that are above 16 years of age. A decline in
the labor participation force will lead to a reduction in the sale of smartphones. Fewer individuals
will be earning an income that will make them afford a smartphone as most of the population
will be unemployed.
Inflation increases the price of smartphones, making them less affordable to most
individuals in the population. Less consumer purchasing power implies that the costs of
smartphones have increased (Howard, 2021). That means that the buyers will be looking for
smartphones sold at a much lower price. In the process, there will be fewer sales of smartphones
by the company as it will be expensive and no one is willing to buy.

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References

Howard, D. (2021). Why did the labor participation rate decline when the economy was good?
United States Census Bureau. Retrieved from
https://www.census.gov/library/stories/2021/06/why-did-labor-force-participation-rate-
decline-when-economy-was-good.html. Accessed 5 August 2021.