CIX1002 PRINCIPLES OF MACROECONOMICS

Video Executive Summary

Semester 1, Session 2016/2017

The Impact of Economic Fluctuations toward Necessity

Goods and Luxury Goods

(Group 1, Tuesday 10am-11am)

Group: Credit Crunchers

List of members:
Shuit Siew Fung

CIA160156

Chong Kai Chuan

CIA160028

Lam Kae Vern

CIB160060

Ahmad Haikal bin Ahmad Mochtar

CIC160001

The Impact of Economic Fluctuations toward Necessity Goods and Luxury Goods

The group video project title is The impact of economic fluctuations toward
necessity goods and luxury goods. This video would reflect on how economic fluctuations
affect different type of businesses in an economy. Thus, the objective of this video is to
present the economic fluctuation effects towards different types of business during
economic boom and recession period.

First of all, there are two business parties which sell luxury goods and necessity
goods respectively. During economic boom, the level of employees income is high and the
purchasing power will increase. Thus, the luxury goods business profit increases
substantially while the necessity goods business profit just increase slightly. However,
when the country suddenly turned into a recession period, the employees income and
purchasing power will both decrease. In light of this, the luxury goods business will face a
huge loss during recession period but the necessity goods business was not affected that
much. This shows that luxury goods, which are mostly not necessities and durable goods,
are more affected towards the changes in macroeconomic situation in a country compared
to necessity goods.

In a nutshell, this group video project explained about the performance of different
businesses during an economic cycle that changed rapidly. It is clear that luxury goods
business is more affected than necessity goods business during economic fluctuations.