...MacroEconomics Diagrams and Definitions What is macroeconomics? • Macroeconomics is the study of a national economy. Macroeconomic Goals Income Distribution Growth External Stability Employment Price Stability Two Sector Circular Flow of Income Monetary Flow Households Expenditure on Goods and Services (E) Real Flow Good and Services = Output (O) Factors of Production Wages, Rent and Profits (Y) E=O=Y Firms 4 Four Sector Circular Flow of Income Leakages (L) Saving (S) Imports (M) Taxes (T) O=E=Y Sum J = Sum L Income Injections (J) Households Investments (I) Exports (X) Expenditure Government Spending (G) Firms 5 Measuring National Income Output Method Income Method Households Good and Services Factors of Production Expenditure on Goods and Services Wages, Rent and Profits Expenditure Method Firms 6 How is national income measured? Employment income + Rental income + Profits + Interest = National Income How is national output measured? Value of goods and services = National Output How is national expenditure measured? Household consumption (C) + Firms’ investment (I) + Government spending (G) + Exports - Imports (X-M) = National Expenditure What is GDP? National Expenditure = National Income = National Output = Gross Domestic Product GDP • GDP = Gross Domestic Product = Total Value of all Spending in an Economy = The Total Value of all...
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...conclusions together to formulate his strategic plan. (2) If McGraw chooses a strategic direction that favors only one department, what negative effects could this have on other departments? How can McGraw mitigate the damage? If McGraw would use a strategy that favours only one department, the brands of the other departments would lose. Sales for the other divisions would also decline probably causing a consequent collapse and closure of these divisions as suggested by Eric Stanger, VP on OM products. The foundation of the OM brand, for example was eroding rapidly due their attempt to underwrite the new line of LR trademarks. It would also cause a slippage in value and trust among their customer franchise and a decline in sales and share. To mitigate the damage, McGraw would also need to pump finance into the advertising and promotion of the other divisions and not only LR or any other single division, for that matter. (3) What effects is the change in the strengths and weaknesses of competition having on...
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...1980–depository institutions deregulation & monetary control act DIDMCA, 6 year phase out of interest rate ceilings, permitted NOW accounts, FDIC coverage to $100000 1989 Financial Institutions Reform, Recovery, & Reinforcement Act (FIRREA)–authorized taxpayer funds to cover cost of liquidating failed thrifts, abolished current thrift regulatory structure, moved thrift insurance to FDIC, required insurance fund= 1.25% of insured deposits ABCT–there is no market mechanism that causes inflation or business cycles, the inflation of prices is an effect not a cause of economic disruption ABCT & unsustainable boom–the fed MS to interest and employment (I), not been a change in time preferences, the in interest sends the wrong signal & investment projects start to compete with consumption for resources, may not be noticed (slack resources get used), eventually C & I will have to bid up resource costs, inflation dampens I, so Fed further MS, effects are only temporary Actual inflation-exceeds inflation expectations, real ex post returns on bonds can be negative AD can shift – AD, shift right. AD, shift left. Whenever C, I, G, net x / due to changes in the money supply AD curve holding constant moving down –quantity of money AD for output–derived from the demand for money or from the real balance effect AD slopes downward–when the price level is lowered our money balances grow in real terms leading us to buy more Addressing the business cycle–stop inflating...
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...Recent deliberation on whether “Malaysia is a safe haven for travel and investment?” was frequently asked by the international tourists and foreign investors owing to the increasing trend of crime rates in Malaysia. From the visual inspection in Figure 1, both property and violent crime rates in Malaysia has increased quite significantly between 1970 and 2006. Over a decade from 1970 to 1980, both property and violent crime rates in Malaysia increased more than two folds. The property crime rate increased drastically from 25 thousand cases in 1970 to 66 thousand cases in 1980. In the similar vein, violent crime rates increased from approximately 3 thousand cases in 1970 to approximately 8 thousand cases in 1980. During the period of economic recession in the 80s (see Figure 1), the property crime rate dropped about 36 per cent and the violent crime rate reduced about 8 per cent over the period of 1980 to 1989....
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...FOREIGN DIRECT INVESTMENT AND GROWTH IN CYPRUS: A CAUSAL RELATIONSHIP N0373193 This research project is submitted in part-fulfilment of the degree of Bachelor of Arts (Honours) Economics, Finance and Banking Nottingham Business School Nottingham Trent University Summer 2014 Chosen Target Peer-Refereed Academic Journal: Journal of Internet Banking and Commerce, December 2011, vol. 16, no. 3 (http://www.arraydev.com/commerce/jibc/) Declaration: I declare that I have personally prepared this article and that it has not, in whole or in part, been submitted as an assessment for any other module, degree or qualification. The work described here is my own, carried out personally unless otherwise stated. All sources of information, including quotations, are acknowledged by means of appropriate referencing. I declare that this project has been conducted in accordance with Nottingham Trent University’s Regulations on Academic Irregularities, including those pertaining to research ethics and Data Protection legislation. Contents: PAGE Abstract 3 Abbreviations 4 List of Tables 5 List of Figures 5 1. Introduction ...
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...World Food Prices: Causes and Consequences Alex F. McCalla Professor Emeritus, Department of Agricultural and Resource Economics, University of California, Davis, 1 Shields Avenue, Davis, California, USA 95616 (phone: 530-752-1529; fax 530-752-5614; e-mail: alex@primal.ucdavis.edu) INTRODUCTION It is a great honor to be invited to give the CAES Fellow’s Address in my home country, to give it on the 400th Anniversary of the founding of Quebec and to do it in Quebec City. The topic given me is current, topical and emotional. Food prices are always controversial, either too high for consumers or too low for farmers and often unstable. The paper is divided into four parts: the first places the current situation in historical context; the second identifies some competing explanations for high food prices; the third analyzes in more detail the Structural Change/Shock story; and the fourth notes the consequences, especially for Developing Countries. The paper closes with the big question - When the bubble breaks, will long run real prices be on a higher level with a stable or increasing trend or will we back to “Business as Usual” with real prices dropping down to the previous level and continuing their 150 year downward trend? THE CURRENT SITUATION IN HISTORICAL CONTEXT FAO’s price index of all foods in dollar terms has more than doubled since last three years of the 20th century, and the real food price index has increased by over sixty percent (Figure 1.). Between...
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...ECON MIDTERM #1 Chapter 1: 1. What goods and services should be produced? * “guns versus butter” decision: * Which of the following is the best example of "what goods and services should be produced?" Selected Answer: the production of SUV’s versus the production of sub-compact cars * Which of the following is an example of how the question of "what goods and services to produce?" is answered by the command process? Selected Answer: government subsidies for windmill energy production How goods and services should be produced? * Involves the allocation of a country’s resources in the production of a particular good or service. * Which of the following is the best example of "how goods and services should be produced?" Selected Answer: the use of additional workers versus the use of machines in the production of goods. 2. Factors of production * factors of production, resources, or inputs are what is utilized in the production process in order to produce output—that is, finished goods. * Factors of production may also refer specifically to the primary factors, which are land, labor (the ability to work), and capital goods applied to production * Resources: Land, Labor, Capital, Entrepreneurship and management skills 3. Scarcity and opportunity cost * Scarcity is the condition in which resources are not available to satisfy all needs and wants of a specified group or people. * Opportunity cost is the amount...
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...7/7/2014 Evernote Export Modern Welfare Criteria Created: 5/22/2012 9:12 PM General Equilibrium and Perfect Competition General Equilibrium of Exchange and Consumption 1. We assume that there is no production and the economy is a pure exchange economy. There are 2 individuals and 2 goods, who will exhaust the goods together. Naturally they will consume until (MRS x,y )A = (MRS x,y )B. But we don't know beforehand what will be the exact equilibrium. But if we know the initial distribution, we can define the boundary within which the equilibrium solution will lie. 2. Thus the initial distribution of goods and their relative bargaining strengths will determine the equilibrium position. This general equilibrium determines not only the final distribution of goods but also the rates of exchange or relative prices. Note that however, we can't determine absolute prices from here, we can only determine relative prices. Show that in PC, General Equilibrium can exist 1. This ca be shown using the fact that under PC, relative prices which A is facing will be same as relative prices which B is facing and hence MRS x,y for both will be same. General Equilibrium of Production 1. We assume that all labor is homogenous, receives equal wages, total quantity of each factor (L and K) is fixed, the production function is continuous and twice differentiable and the technology is given which together with factor endowments limits the production possibilities. Naturally the equilibrium condition...
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...International Journal of Applied Business and Economic Research, Vol. 9, No. 2, (2011): 145-165 STUDY ON DYNAMIC RELATIONSHIP AMONG GOLD PRICE, OIL PRICE, EXCHANGE RATE AND STOCK MARKET RETURNS K. S. Sujit1 and B. Rajesh Kumar2 Abstract: The dynamic and complex relationship among economic variables has attracted the researchers, policy makers and business people alike. This study is an attempt to test the dynamic relationship among gold price, stock returns, exchange rate and oil price. All these variables have witnessed significant changes over time and hence, it is absolutely necessary to validate the relationship periodically. This study takes daily data from 2nd January 1998 to 5th June 2011, constituting 3485 observations. Using techniques of time series the study tried to capture dynamic and stable relationship among these variables using vector autoregressive and cointegration technique. The results show that exchange rate is highly affected by changes in other variables. However, stock market has fewer roles in affecting the exchange rate. In this study we tested two models and one model suggests that there is weak long term relationship among variables. JEL classification: C22; E3; Keywords: Unit root tests; granger causality test, Cointegration; Vector auto regression (VAR) INTRODUCTION Gold was one of the first metals humans excavated. Gold as an asset has a hybrid nature: it is a commodity used in many industries but also it has maintained throughout history...
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...Running head: MARKETING MANAGEMENT Marketing Management in Purity Cosmetics [Name of the Writer] [Name of the Institution] Marketing Management in the Purity Cosmetics Introduction The marketing concepts and the marketing strategies of a company lead the company towards the path of success in terms of higher economic growth and a competitive position among the leading companies in the marketplace. The Purity Cosmetics is lagging behind in the economic area in terms of slower progress and is therefore unable to compete with the leading companies of the respective field. The company needs to improve the marketing strategies by providing the staff members with the awareness programs related to the marketing concepts and enabling them to lead their company with distinct economic growth and progress among the competitors. Discussion The Purity Cosmetics tends to initiate the awareness campaign among its staff members to overcome the issues of slow growth and compete with the stiff nature of the market. The members of the staff are required to be aware of the core concepts of marketing, regarding the sales and marketing approach associated with the development of the Purity Cosmetics in the market. TASK 1 Core Concepts of Marketing Marketing is basically the transportation of the goods and products from the producers to the consumers. Meanwhile, it carries the process of discovering the customers’ needs and then translating into the products and services as required. The main theme...
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...provide banking services in Vietnam. Internationalisation will pose major challenges for financial sector polices, underlining the importance of further progress with financial sector reforms and reforms of monetary policy. This paper will present the current status of the reform of monetary policy in the context of economic and financial sector developments in Vietnam and identify key reform issues with respect to monetary policy. Section 2 will give a brief overview of principal economic and financial developments to situate monetary policy in the context of economic developments in Vietnam. Section 3 describes the monetary policy framework currently in use in Vietnam, and Section 4 presents empirical results on the determinants of inflation and the role of monetary factors. 2. 2.1 Background: macroeconomic developments Economic growth and inflation The Vietnamese economy has shown strong economic performance since the early 1990s (Figure 1). Annual average growth per year was 7.4% for the period since the early 1990s, and in recent years Vietnam had one of the highest growth rates in East Asia. During the 2001-2005 five-year plan, the annual average growth of 7.4% was only slightly below the 7.5% annual average target in the...
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...certain reforms under a new reform minded administration. Prior to the present democratic rule, Nigeria's former military rulers failed to diversify the economy away from its overdependence on the capital-intensive oil sector, which provides 20% of GDP, 95% of foreign exchange earnings, and about 80% of budgetary revenues. The largely subsistence agricultural sector has failed to keep up with rapid population growth - Nigeria is Africa's most populous country - and the country, once a large net exporter of food, now must import food. Following the signing of an IMF stand-by agreement in August 2000, Nigeria received a debt-restructuring deal from the Paris Club and a $1 billion credit from the IMF, both contingent on economic reforms. Nigeria pulled out of its IMF program in April 2002, after failing to meet spending and exchange rate targets, making it ineligible for additional debt forgiveness from the Paris Club. In 2003, the government began deregulating fuel prices, announced the privatization of the country's four oil refineries, and instituted the National Economic Empowerment Development Strategy. In November 2005, Abuja (the federal capital territory) won Paris Club approval for a debt-relief deal that eliminated $18 billion of debt in exchange for $12 billion in payments - a total package worth $30 billion of Nigeria's total $37 billion external debt. The deal requires Nigeria to be subject to stringent IMF reviews. GDP rose strongly in 2007,...
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...ELECTRICITY DEMAND SIDE MANAGEMENT (DSM) IN INDIA – A STRATEGIC AND POLICY PERSPECTIVE S. PADMANABAN & ASHOK SARKAR Office of Environment, Energy and Enterprise US Agency for International Development, New Delhi, India. Overview The Indian power sector has more than tripled its installed capacity, from 30,000 MW in 1981 to over 100,000 MW in 2001. Despite this growth in supply, its power systems are struggling to overcome chronic power shortages and poor power quality. With demand exceeding supply, severe peak (around 18%) and energy (around 10%) shortages continue to plague the sector. Shortages are exacerbated by inefficiencies in power generation, distribution and end-use systems. The inefficiencies in the end-use systems is due to irrational tariffs, technological obsolescence of industrial processes and equipment, lack of awareness, nascent energy services (ESCO) industry, and inadequate policy drivers (such as energy efficiency standards and labeling system, financial incentives) in India. The elementary problem being faced by the power sector is the poor financial conditions of the State Electricity Boards (SEBs) or successor entities in most states. Over the years, the SEBs have been causing an increasingly larger drain on the State Government budgets, contributing to 10-15% of the state fiscal deficits adversely impacting much needed investments in the social sectors of health and education. The power sector is operating with very low or no returns...
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...affecting our economy. This paper will illustrate the impact of malnutrition on businesses and economies, and how it has altered my outlook towards life. Malnutrition is not only an urgent global health issue; it is also a hitch to productivity, economic growth and poverty reduction. We again end up asking the unchanged question, who is responsible? Definition UNICEFii defines malnutrition as a broad term commonly used as an alternative to undernutrition but technically it also refers to overnutrition. People are malnourished if their diet does not provide adequate calories and protein for growth and maintenance or they are unable to fully utilize the food they eat due to illness (undernutrition). They are also malnourished if they consume too many calories (overnutrition). Words like GDP and GNP which was covered in the class, provided me with a different perspective to the situation. I took time to review the effect of malnutrition in my country, India. I found that malnutrition was causing a loss as high as 3 to 4% to my country’s growing GDPiii. Even though the overall GDP of the country has been rising, the amount of loss caused by malnutrition is also increasing. Effect of Malnutrition on Economy Malnutrition indicates poor economic policies of the country, deprived agricultural conditions and also...
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...State, Nigeria Tel: +234-802-394-8641 Email: felicitymy79@gmail.com Received: January 20, 2011 Accepted: March 30, 2011 doi:10.5430/ijfr.v2n2p61 Abstract This study investigated the determinants of commercial banks’ lending behaviour in the Nigerian context. The study aimed to test and confirm the effectiveness of the common determinants of commercial banks lending behaviour and how it affects the lending behaviour of commercial banks in Nigeria. The model used is estimated using Nigerian commercial banks loan advance (LOA) and other determinants or variables such as their volume of deposits (Vd), their investment portfolio (Ip), interest (lending) rate (Ir), stipulated cash reserve requirements ratio (Rr) and their liquidity ratio (Lr) for the period; 1980 – 2005. The model hypothesizes that there is functional relationship between the dependent variable and the specified independent variables. From the regression analysis, the model was found to be significant and its estimators turned out as expected and it was discovered that commercial banks deposits have the greatest impacts on their lending behaviour. The study then suggests that commercial banks should focus on mobilizing more deposits as this will enhance their lending performance and should formulate critical, realistic and comprehensive strategic and financial plans. Keywords: Lending, Deposits, Investment, Portfolio, Liquidity, Solvency, Interest rate. 1. Introduction Lending which may be on short, medium...
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