...level *Recall that regarding the money supply, the Central Bank has tools that enables it to control money supply ( the capability of Commercial Banks to create deposits), most important tools: Open market operations by CB selling or buying governmental bonds, changing the discount rate which is the interest rate on loans from CB to commercial banks & changing the legal reserve ratio. So if the CB seeks to adopt a loose monetary policy it can decrease the discount rate, decrease the legal reserve ratio,& go through an open market operation by buying gov. bonds.( & vice versa if CB seeks to adopt a tight monetary policy). *In addition to the public`s demand for money for TRANSACTIONS that is affected by the general price level & real GDP..., do speculators demand money? Yes, as they try to achieve profits from the fluctuations in the market price of bonds, ie they buy bonds, when their market price is low & sell bonds ,when their market price is high, thus achieving profits. However, what determines the market price of bonds? the following example helps you to understand: If a bond promises to pay $100 ONE YEAR from NOW, & the interest rate was5%, WHAT IS THE MAXIMUM AMOUNT OF MONEY YOU ARE READY TO PAY NOW for that bond?ie what is its market price? We have to calculate the PRESENT VALUE of the $100 by using the following equation: Present value = Return / 1+5% 95.24 = 100 / 1.05 What do you notice? We notice that there is...
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...Supply & Demand Paper Economics How this whole world runs is based on the economics from country to country. Economics is the cause and effect of everything from; unemployment, bankruptcies, corporations going under, individual consumers, and the list goes on and on. Every aspect of business and society is related to economics. With economics lie 3 central problems: what to produce and how much, how to produce it, and who do you produce it for. In our society, especially in the United States, we have one of the strongest economies in the world. In the past year or so, America’s economy has started to slip. For example, it kind of started with the bailouts of the major banks in the U.S. The major banks started to fall and fall fast. The banking system is a huge factor of our economy and business. It is where our money comes from really. Real Estate loans, Business loans, Stock Market, etc. The major banks hold our economy together. This is why some think it was necessary to bail these banks out and put America further into an unimaginable deficit. Economics is a broad study of supply and demand. Law of Supply The law of supply is a simple concept. It is based off the expectation of profits and substitution when needed. It states that as the prices rise of a good let’s say, the supplied quantity is going to rise as well. According to Investopedia-Forbes Digital Company (2009) that the law of supply is, “a microeconomic law stating that, all other factors being equal...
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...China economics…………………………………………..…..….4 Summary of article…………………………………………………………………...….4 Aggregate supply (AS) models……………………………………………………..…5 Aggregate demand (AD) models………………………………………………..….....6 Government policies to overcome above problems and effectiveness…………7 Conclusion…………………………………………………………………………………..8 Reference list…………………………………………………………………………………9 Introduction of China economics China’s economy is rapidly huge and expanding in these years. It is the fourth largest country in area after Russia, Canada and USA has experienced multifarious changes in its economic system which has seen it become the second largest economy in the world after USA if measured on the Purchasing Power Parity (PPP) scale. However, China still considered as an emerging economy as per capita incomes fall in the lower-middle level, China is making its presence felt in the global stage by taking big strides in opening up its economy to international trade. There are many economic problems faced by China during the years. And the inflation has become a serious challenge for the developing economy; the surplus of population and the rising unemployment rate and price. According to statistics, more than 250 million migrant workers and their dependents had removed to urban areas to find work. Hence, as China’s economy slows down due to falling external and internal demand, a number of 6.8 million new college graduates poured in to the job market in 2012, China’s unemployment situation...
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...would increase to a high level. For instance, if the economy goes to recession the unemployment levels rise. Inflation and unemployment also known as stagflation was first reported in 1958 by A. W. Phillips he discovered that when unemployment falls, or there are vacancies available, workers were empowered to push for higher wages and, as a result company's passed these higher wage costs to consumers, which in turn results in higher prices of goods and services. These led to inflationary buildup in the economy. Both inflation and unemployment are related because an increase in the cumulative demand also increases inflation while lowering unemployment. Unemployment is defined by the characteristic of the labor market while inflation is determined by the growth of money 3.1. Causes of inflation The main common causes of inflation include economic growth that grows too fast also known as demand pulls inflation and cost-push factors also...
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...Supply and demand 1. Demand and factors influencing it. The law of demand Demand is an economic category, which characterizes the requirement of buyers for a particular product, provided with sufficient means of payment that allows you to purchase the goods at a certain price in a given time period for a particular market or in a particular country. Distinguish individual and aggregate demand. Individual demand is the demand of a specific buyer on a specific product, and in this market. Aggregate demand is the total demand for goods and services in any country. Also there are primary and secondary demand. Primary demand is demand for the product or services a specific category of goods in General. For example, it may be the demand for coffee or the demand for insurance services. Secondary (or selective) demand is the demand for goods of a certain brand or company for services of a certain type. Additionally, the demand is negative, the absent, the latent (potential), full, over, falling (falling), the fluctuating, irrational, rush (avalanche). Negative demand is the demand that occurs in cases when consumers "dislike" the product and avoid its purchase. The missing demand is the demand for the goods that are unnecessary in the market or obsolete. Latent demand is the demand expected in the future, the demand of potential buyers. Full demand is the desired demand exactly the relevant production possibilities and policy of the manufacturer of the product or service. Excessive demand...
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...what is good for their customers is also in the long run good for ikea. Their goal is to create a better everyday life for majority of the people. The starting point for Ikea is always, their customer’s needs and wants. That is why Kamprads idea was to offer a wide range of home furnishings of good design and functionality at a price low enough to be afforded by most people (Edvardsson and Enquist, 2006.) Most customers would want to go shopping and not feel pressured to buy, thus Ikea has very few sales people on the floor, and they are rather more of a help aid in locating the items which are stored at the market hall section, often located at the end of the store. They also have special QR codes in case a customer wants to learn more about a specific product. With Ikea’s concentration on individual marketing rather than mass marketing, also takes into consideration the needs and wants of each country. For instance beds are bigger for the U.S customer (Marketing Week, 1996.) Austria’s taste for seventies corner sofas are satisfied too .A majority of Ikea’s stores are located outside of cities centers primarily because of land cost and traffic assess.(www.wordpress.com) In China the stores are located along rail way lines, so to meet the transportation needs of the masses. Ikea’s appeal to customers stems from the fact that is not your typical furniture store. Their ability to create a well-defined market appealing to their customers and different from the competition, is...
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...Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis. The economist would approach the problem of alcohol abuse as cost, and how they could put it in real numbers. When measuring the cost of alcohol abuse in any city in the U.S. we must understand what make the assumptions of alcohol abuse comprehensible and to focus on the relevant alcohol abuse. We have to think about such things as health services and medical expenses, premature death, loss of productivity, and alcohol related crimes. In total, the U.S. economy loses an estimated $185 billion each year to alcohol-related problems, according to the National Institute of Alcohol Abuse and Alcoholism. We use the assumptions to help explain, Economics is a discipline, but it is not an exact discipline. Economic theory simplifies situations because it would be nearly impossible to predict and include every relevant variable and factor. Just look at the cost of drunk driving. Drunk driving is a insightful subject to many people because so many lives have been affected by this crime. The National Highway Traffic Safety Administration reports that alcohol-related motor vehicle crashes kill someone every 31 minutes and nonfatal injure someone every two minutes. During 2005, 16,885 people in the U.S. died in alcohol-related motor vehicle crashes, comprising 39% of all traffic-related deaths...
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...Unemployment Economists try to determine the health of economies by monitoring data sets, statistics and indices. Economic data, which are permanently released by the government and statisticians, are a helpful tool to assess the current stage of an economy (e.g., recession, depression). The national unemployment rate, which is released monthly by the Bureau of Labor, is one of the most important economic indicators. This memo will focus on the different types of unemployment, the ways to measure unemployment, the unemployment data itself, and policies that are used to target unemployment. The different forms of unemployment Although unemployment as a concept has a negative connotation, there are three types of unemployment, which differ in terms of their impact on the economy. The first type, frictional unemployment, is the least severe kind of unemployment. According to the website Investopedia.com, frictional unemployment “is always present in the economy, resulting from temporary transitions made by workers and employees or from workers and employers having inconsistent or incomplete information” (“Frictional Unemployment”). Clearly, no tall job seekers have the tools to find the right company. Even people who can access job offers online might not be able to find the right position. However, employers face the same problems. For example, a company might have an open position for a bilingual administrative assistant, but hiring managers may not have the right...
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...Principles of Business Credit Chapter 1 - Credit: must involve exchange of values - 5 C’s of credit: character, capacity, capital, collateral, conditions - credit ( can be private or public - Credit Process: o First goes through a buyer who wants to buy a service or product o operating cycle: activities company goes through to produce and sell its goods and services o production stage: when material is converted into goods o manufacturer then sells finished goods to customers and customer pays for goods that were purchased on credit (collection stage) - Types of Credit o Public credit: government credit o Private credit: extended or used by individuals or businesses to carry on exchange of goods and services in private sector Private credit: - Investment credit - Consumer credit - Agricultural credit - Business credit - Bank credit Investment Credit: long-term borrowing of large amounts of money to finance productive assets. Primarily loans made to governments or businesses to raise money to pay for expansion modernization or public projects. - Bonds of fixed income securities (generally 10+ years) - Asset backed bond (backed by specific holdings for ex. Real estate) - Debentures (backed by financial standing, not assets) most common. - Secured bonds o Mortgage bonds o Equipment trust certificates (bonds issued to buy new...
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...FISCAL POLICY & MACROECONOMIC MODELS There are three macroeconomic models in which to analyze the effects of changes in fiscal policy: Keynesian, Monetarist and Classical. Keynesian Model The Keynesian model focuses on attempting to manage the “Demand” side of the economy by using taxation and spending to redistribute income and wealth. The rationale is that redistribution of income and wealth via taxation and use of transfer payments [government spending] will drive the “Demand” function thereby driving the overall economy. The Keynesian model makes no distinction between tax rates and tax revenues and assumes that government spending in the form of transfer payments will increase or decrease demand based on the level of spending AND the spending multiplier. The spending multiplier can be expressed mathematically as: Spending Multiplier = 1 / (1 – MPC) in which MPC is the “marginal propensity to consume.” Keynesian economics is based on the view that lower income brackets have higher MPC, while higher income earners have lower MPC. Accordingly, the transfer of income and wealth to lower income earners will transfer into increased economic growth because every dollar of transfer payments in theory will have a higher multiplier effect. The increase or decrease of “taxes-and-spending” should accelerate [or decelerate] economic growth depending on how it is applied. Observations: Keynesian economics ignores or does not take into account that changes in tax rates...
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...Associate Level Material Appendix B Picture the Supply Chain |Upstream Component |Internal Component |Downstream Component | |(sourcing/procurement) |(packing/assembly |(distribution) | | |manufacturing) | | | | | | |Where planning, managing, sourcing and |Packaging, manufacturing, assembling are |In this supply section, allocation and/or | |producing of the entire activities are made|taken place in this supply section. |distribution of the finished products by | |by external suppliers. | |external distributors are taken place. | | |Based on the behavior of Warner Brother’s | | |For this purposes, Hewlett-Packard is |customers and the booming in technology |Due to nature of the customer demand and | |chosen main supplier by Warner Brothers. |with new gadgets and devices, Warner |growing technology, Warner Brothers created| | |Brothers decided to make future investments|digital...
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...city of Atlantis, we learned how the supply and demand curve moves back and forth and their relation to the equilibrium price. Depending on the health of an item or service that has an elastic price, the economy can and will directly effect the supply and demand of said product or service, and in this case two bedroom apartments. Two Micro and Macro Economic Concepts There are two concepts that stuck out to me in the simulation. One of them being prices, or pricing theories and the other being economic welfare. Based on supply and demand, the simulation showed how because of demand the prices on the two bedroom apartments can increase, especially if there is an influx in demand or a shortage in supply. In the opposite scenario, prices can decrease if demand is low and supply is high. This relates to economic welfare because is the economy is struggling, and then prices for two bedroom apartments are affordable. The pricing is elastic. Where as if the economy is in surplus, we experience inflation and the prices are higher and supply could be bleak. Shift in the Supply Curve There were multiple shifts in the supply curve within the simulation in the city of Atlantis. The supply shift that I took most interest in was when the IT and Biomedical companies started taking up residence in Atlantis. Suddenly, the population has increased the supply has stayed the same but the demand is now significantly more with the...
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...are topics students have an opportunity to explore. Rates of Interest In the world of economic studies, the term, interest rates, inevitably comes up. Interest rates are key factors within the financial sector. Economists define interest rates as the process charged for the use of financial assets. Interest rates fluctuate almost daily. The largest contributing factor is the current economy of the country. When the economy is growing, people are getting more employment, and more saving and lending occurs. Interest rates tend to increase as the demand for money increases. The opposite holds true when the demand for money falls. As the demand falls, interest rates will fall. Another factor that affects interest rates is acts of the government. The federal government is the largest borrower of funds and holds the power to change laws regarding tax. Transferring their interests between financial assets and money, people can affect the demand for money. Sometimes, people choose to hold onto their money rather than to buy bonds that pay more interest than money. Some...
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...service supply chains in order to improve the quality and flexibility of service processes because of that their study has a broader perspective. Based on their study, Akkermans and Vos confirmed the occurrence of upstream amplification of workload in the service supply chain, workload being a more appropriate measure for amplification effects in service supply chains than inventory levels. According to their case results, there weren’t able to find all root causes of “bullwhip effect” in this industry: batch ordering and shortage-gaming. The major root cause that could cause the bullwhip effect is Demand signaling and price fluctuations with emerging workload and quality as per Akkerman and Vos. Workload and Quality: It also goes hand in hand that when there is extra workload, quality suffers and vice versa. This causes the birth of rework which creates extra workload asking for more time, value and money creating accumulation or backlog causing more delays. Order batching: Batch ordering can not apply in the service supply chains where the intangible nature of services is because there is no way to hold inventories and also the delivery of services is essentially make-to-customer order. Because of the nature of services, order batching is not relevant as a root cause of amplification effects in service operations. Shortage gaming: Shortage gaming may apply in the service supply chains. Based on the findings of study, customers requesting a second line certainly do not ask...
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...Trade Report International trade is one of the best things a country can do for its economy. It creates amazing opportunity for countries to specialize in what they make best after weighing out their opportunity costs, make more money, increase their production, and create relationships with other countries. There are many advantages to international trade but there can also be some disadvantages as well. When a country is making a decision on whether or not they are going to trade internationally, they need to weigh out each advantage and disadvantage with each country they are trading in. Advantages versus Disadvantages As a country is deciding on international trade they need to see what their own opportunity costs are as well as if the country they are doing business with is going to benefit from the trade as well. One thing that needs to be looked at first is the strength one country’s currency against the other. This can create an advantage as well as a disadvantage because if the country’s currency is weak compared to the others than it would better to export and vice versa. One advantage that was found during the simulation was the fact that Rodamia was able to specialize in the production of corn. The production of corn was the largest part of their agriculture. They were also able to specialize in exporting many of their industry specialties because this was also thirty percent of their GDP. With being able to specialize in these areas the country was able to maximize...
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