Principles of Solar Engineering - Case Study Example

Macroeconomics Analysis for solar panels Macroeconomics refers to the study of large scale economies. Rather than focus on individual economic decisions, macroeconomics focuses on the movements of entire economies. Although many people view macroeconomics as complex, it does have some helpful key principles that can give a one a good foundation in understanding how the economy works. Macroeconomics analysis majors on particular product in a broad economic view, on its market forces, economic impacts and effects on other similar products (Gillman, pg.73). My neighbor Cindy has planned to start a contracting business installation of solar panels as an alternative for cheap energy for both domestic and industrial use. This is after the government incentives towards installation of solar panels as a way of reducing environmental pollution and provides a cheap source of energy. However, this project draws a great attention to the macroeconomics Analysis, its resultant outcomes and impacts to the economy. Generally, the beginning of the whole project will impact on the GDP. GDP simply refers to Gross Domestic Product, which is the monitory value of the goods and services produced within a country at a particular period of time, probably one year. The GDP comprises of the domestic consumption - the consumer spending, government spending, sum of the county’s business and the total net exports. There will be a general increase in the GDP of the country. On the introduction of the solar panel project, many industries will emerge to produce the solar panels. This will give an additional product in the list of goods produced within the country. A production of excess of the panels will also add to the country’s exports. The government, because it is its initiative to run the project, will also invest in the solar panel project. Many people will also be motivated to get the solar panels installed on their roofs, hence spending on the project. The whole project will create an expansion in the service industry. People, the likes of Cindy will specialise installation of the solar panels. The same specialists may also export their services to other countries who are importing the solar panels. The product of solar panels in substitution to the electricity among other sources of energy will come with intensive support and high demand in the local, domestic and international markets. This demand will be as a result of the product being cheap. Comparing the purchase, installation and maintenance of the solar energy among other types of energy such as generators and electricity, this product will be cheap to acquire and maintain. For instance the demand of a product is inversely proportional to the demand. A commodity whose price is high will get a low demand in the market. A new product with a low price will increase the demand in the market. The supply of the solar panels will again be high due to the high demand. In the general view, this business of manufacture of the solar panels will be accompanied by a wide range of advantages. Apart from providing an alternative cheap source of energy, it will also lead to industrialization and industrial development. Many companies will emerge to produce the product. These companies will opt to sell their product both in the local and international market hence creating an expansion of the domestic and international trade. These two aspects - industrialization and expansion of the market grounds will create employment opportunities. Many people will get employed in the industries. Others, like Cindy will also get jobs of installation of the solar panels on the roofs. The creation of employment will add to per capita income and improvement of the living standards of the individuals. However, this new project poses threat to job of many. There are many people working in electricity firms. There are also many companies manufacturing generators for electricity production. Millions of people are working as electricians for wiring and installation of electricity in homes and industries. There are also numerous companies producing power cells. The emergence of the solar panels as an alternative source of energy will pose a threat to the mentioned sectors of production. People will turn to solar panels abandoning the generators and electricity. The industries producing these will decline, and those employed in these sectors lose their jobs. The aspect of decline in the out competed industries and lose of employment will cause decline in the National income. There will be low per capita income and reduction in exports products, in case the country was exporting its electricity or other products related to electricity to their external markets. This may be the basis of the great opposition that the solar panel project is likely to encounter. Those who rely on electricity as their source of income may pose a great opposition to the production and installation of the solar panels as an alternative source of energy. The Cindy Solar Panel project is not personal economic oriented. In an extensive diverse, this project will also impact on the fiscal policy. The Fiscal policy in economic and political perspective refers to the process by which the government sources its revenue and its expenditure and spending’s to influence the economic stand of the nation. For instance, the government may decide to raise its taxation levels intentionally to increase its revenue and invest on a particular project (Hantula, pg. 55). As outlined in the previous paragraph, the solar panel installation will cause recession. This may force the government to adopt the Expansionary Fiscal Policy. In the case of Lack of employment and collapsing of some industries due to the new product, the government expenditure will tend to rise above its revenue. This will force the government to impose monitory policy through interests and high taxations on other products to cater for the experienced deficit. The whole issue will be characterized in rise in prices of other goods and services. Unexpectedly, the purchasing and installation cost of the solar panels may generally be high to cater for the deficit. Otherwise, the government will be forced to develop other sectors of the economy to avoid retardation in the country’s economy. The whole project may also change the direction of the government expenditure. The government, this being its initiative will spend much of its revenue on the establishment of the project. This will range from importation of the solar panels in case the country does not have a producing company for such. The government will also take the initiative to finance the establishment of industries for the manufacture of the solar panels. Training institutions will also be established to offer trainings for the installation of the solar panels on the roofs. This will impact to a neglection of the other sectors of production such as agriculture and transport and may hence or otherwise lead to retardation of the economy. The solar panel installation will also impact on international trade. Introduction of the solar panel will lead to a new commodity in the international market which will add to income from international trade. However, the solar panels impact of recession might also affect negatively the international trade. There will be reduction in trade items, in case of a country that relied on electricity and other sources of energy as items of export. In case the new commodity - solar panel does not fully cover the gap created by the substituted product - electricity and generators, the country will be forced to introduce another commodity in the market to avoid payment imbalance and maintain favorable terms of trade (Goswami, Kreider, & Kreith, pg. 76). The case of inflation-hiking of prices of solar panels and related products may be experienced. This will be as a result of high demand accompanied by limited supply. This will make the commodity expensive to acquire, hence most people stick to old sources of energy. This might affect the progression of the solar panels as many people will view them as expensive when compared to other alternatives. In a case that the solar panels do not establish a firm foundation in their new market, the old sources of energy might take advantage of their monopoly status to exploit the customers. Demography may also be affected by the introduction of the solar panels in the market as an alternative source of power. Creation of job opportunities to people like Cindy- Installation Electricians, among other jobs in the sector of producing the solar panels will create a social group of working class. There will also improve living standards due to the savings made on energy costs and the employment aspect. The population is likely to grow due to the stable economic status brought about by the solar panels. This is a nice project that is likely to get favor and flourish in the new market (Bach & Flanagan, pg. 50). In consideration to various aspects, i would advise my neighbor Cindy to engage in the contract and invest in the new project. This is because, the world is advocating for change. This being a new product, people will have the zeal and anxiety to have a test of it, hence she is likely to get ready customers. The aspect of economization has also developed in the minds of many. Most people go for alternatives that are cheap and affordable. This substitute for energy will introduce a new and cheap form of energy which will be affordable to many homes. The aspect of government support is the greatest favor towards the flourishing of this project. This is a government initiative and hence there will be full support and availability of capital. The advertisement of the product-solar panel and its advantages will mostly be done by the government hence Cindy will not spend much of her capital in creating awareness of the new product. The issue of recession in the country’s economy and the aspect of deployment and retardation of other sectors of production will be addressed by the government. The government will create new sectors of production to avoid the economic decline. Serious specialization in the production of the solar panels may also lead to rampant increase in the GPD through local sales and international market. Otherwise, this is an economically influential aspect whose progress and success will be highly determined by a combination of various aspects of economic production. Work cited Gillman, M. Advanced modern macroeconomics: Analysis and application. Harlow, England: Pearson/Financial Times Prentice Hall, 2011. Print. Hantula, R. Solar power. New York, NY: Chelsea Clubhouse, 2010. Print. Goswami, D. Y., Kreider, J. F., & Kreith, F. Principles of solar engineering. Philadelphia, PA: Taylor & Francis, 2000. Web. International Energy Agency. Solar Energy Perspectives. Paris: OECD Publishing, 2011. Web. Bach, G. L., & Flanagan, R. J. Macroeconomics: Analysis, decision making, and policy. Englewood Cliffs, N.J: Prentice-Hall, 1987. Print. Read More