...The Use of Knowledge in Society is published on American Economics reviews in 1945,which mainly talked about the knowledge of particular circumstances of time and place. He was referring to division of knowledge that businessman will not particular knowledge of how to run their business, instead within the business,workers might know to how make a product which the boss doesn’t know and consumers will know how the best they can economize,and outsiders will not have the access to get to know such kind of information. Workers and customers who seem to have better knowledge are called "the man on the spot". So if the businessman is not able to observe every details better than his workers do,does it imply that he or she is an uncivilized boss running an efficient economic model? The answer is no, because there is no need to know those things which are considered almost impossible to be accomplished, and unnecessary even if such goal is achieved.Hayke took an example of tin market,for some reason there is a disruption on the supply of tin on the global market,that means less tin is supplied in the market,the effect of the disruption will comminuted through changes in prices,individuals will economize on the tin accordingly without knowing the disruption itself,like why it happened,how long it will last or anything else about the disruption,all they have to do is to react to the higher price of the tin. Decrease on the supply of tin drives the price up which follows the rule of supply...
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...Any further copying or communication of this material by you may be the subject of copyright protection under the Act. Do not remove this notice. 1 Educational Objectives for Today • Foundations of the economy • Similarities and differences between analog and digital goods • Understand the basic concepts of the digital economy • A brief overview of the history of IT • Creative destruction and digital disruption | EBUS3050 | The Digital Economy| I. Introduction “These Google guys, they want to be billionaires and rock stars and go to conferences and all that. Let us see if they still want to run the business intwo to three years.” (Bill Gates, Microsoft, 2003) “$100 million is way to much to pay for Microsoft.” (IBM, 1982) Week 1 3 “Information technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without the talking about the others.” (Bill Gates, Microsoft) “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine.” (Paul Krugman, Professor of Economics, 1998) “I think there is a world market for maybe five computers.” (Thomas Watson, IBM CEO, 1943) “There’s no chance that the iPhone is going to get any significant market share. No chance.” (Steve Ballmer, Microsoft CEO, 2007) The ongoing advances in information technology have a strong...
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...Book review of ‘No Ordinary Disruption: The Four Global Forces Breaking All the Trends’ Reference of this book: Dobbs, R., Manyika, J. & Woetzel, J. (2015) No Ordinary Disruption: The Four Global Forces Breaking All the Trends. United States: PublicAffairs Basic idea of this book In this book, Dobbs, Manyika, and Woetzel emphasize various methods to reset intuition by individuals, companies and governments as a result of four global disruptive forces changing global economy. This book was primarily divided into two parts. In this first part, the authors identify four fundamental disruptions that have quickened and intensified the shifts in global market: the increase of emerging market and the age of rapid urbanization especially in China and India,which led to a significant contribution to help most people escape poverty; the accelerating technological change of nature force of market competition; the aging of population; complex global connections through trade, capital and people. The second part puts emphasis on corresponding strategies and measures to be adopted by individual, companies and government, to adapt to the changes. It might be an example for the future that the increase of cost of capital and a lack of high-skill workers and low-skill jobs. Equally important, the resetting of management intuition and ability to respond to changes concern thinking pattern and decision-making for executives and leaders (Akhila, 2015). On the...
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...advanced economies. Before the companies let go the workers, them cut back on the overtime and make other adjustment. The fiscal balances and growth affected because of the high risk premiums on sovereign debt are inflicting similar or even worse damage. The oil shock has been affected to the global recovery the possible disruption in oil supplies and the associated spikes in oil prices. The government Malaysia had take measures to limit foreign borrowing and regulate and strict control over the banking sector, the sector banking was not adversely affected by the crisis. Because of this, Malaysia did not need IMF help to overcome the crisis. Malaysia was the country that recovery fastest from the crisis without the IMF assistance. Malaysia was established the National Economic Action Council (NEAC) on January 7, 1998 to make concrete proposals to the Government to rein in the economic downturn. NEAC then prepare a paper which Plan National Economic Recovery aims to stabilize the ringgit, restore market confidence, maintain the stability of financial markets, strengthen the economic base, pursuing the agenda of equity and reviving the sectors hardest hit by the economic...
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...world's problems. So far, almost all of the evidence from the past three decades (1970-2000) - the period of economic globalization's most rapid ascendancy - shows that it is bringing exactly the opposite outcome that its advocates claim. Clearly, poverty and inequality are rapidly accelerating everywhere on earth. A 1999 report by the United Nations Development Program found that inequalities between rich and poor within and among countries are quickly expanding, and that the global trading and finance system is one of the primary causes. Even the U.S. Central Intelligence Agency (CIA) confirms the United Nations' (UN) conclusions, agreeing that globalization brings massive inequalities. The benefits of globalization do not reach the poor, says the CIA, and the process inevitably brings increased global protest and chaos. Robert Wade of the London School of Economics, wrote in The Economist (2001), "Global inequality is worsening rapidly...Technological change and financial liberalization result in a disproportionately fast increase in the number of households at the extreme rich end, without shrinking the distribution at the poor end...From 1988 to 1993, the share of the world income going to the poorest 10 percent of the world's population fell by over a quarter, whereas the share of the richest 10 percent rose by 8 percent." The ideologies and rules of economic globalization - including free trade, deregulation, privatization, and structural adjustment - have destroyed...
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...Economist The article looks at increasing oil prices, reasons for the increases and the effects on individual countries and the global economy. Next slide High oil prices have become the latest source of worry for the world economy, and the four main questions everyone is asking in assessing the dangers posed by more expensive oil are: What is driving up the oil price? How high could it go? What is the likely economic impact of rises so far? And what damage could future increases do? The article starts by explaining that the price of Brent crude increased by more than $5 a barrel on March 1st, to $128, after an Iranian press report stated that explosions had destroyed a vital Saudi Arabian oil pipeline. After the Saudis denied the claim, the price fell back to $125, however this is still 16% higher than at the start of the year. Next slide It goes on to discuss reasons for the increase in oil prices such as a move by investors who are now investing into hard assets especially oil, increased global prospects which have increased expectation for oil demand and disruptions in supply. The article concludes that supply shocks, do more damage to global growth than higher prices that are the consequence of stronger demand. Next slide Even though this chart shows Saudi Arabia is pumping 10 million barrels per day, a near-record high. The oil market has lost more than 1m barrels a day of supply due to a variety of issues such as the pipeline dispute with South Sudan. The cushion...
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...destruction of computers to cover up altered data, however in the modern day, cybercrime the computer is used as a tool. In Africa Nigeria is the most fraudulent country on cybercrime and the third in the word. In the United States of America alone cyber crime costs the economy losses worth $100billion dollars. If we are to roll out a similar survey then we could be talking of losses that run into trillions of dollars. These are losses that are incurred by businesses from all sectors: starting from the banking industry, manufacturing industry, the ICT sector transport and nearly all sectors both government and non government run organizations. Running head: The Economic Impact of Cybercrime 3 The internet and computer networks can be looked at as a double edged sword that present a set of lucrative business opportunities for the young and the old alike, and an array of problems whose solutions have overwhelmed...
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...Universal banking is the norm in lower- and middle-income countries. Ever- expanding safety nets also seem to be the norm in the 20th century in these same countries. Is there a connection between the two? Should the structure of the financial system influence the depth or breadth of the financial safety net adopted by governments? Why or why not? The role and the future of safety nets as an inherent feature of the majority of financial systems today have been debated widely following the recent financial and economic meltdown. In order to develop adequate reforms for the global financial system, it is important to understand the role of safety nets in both developed and developing economies and its interconnection with the financial institutions. This paper will investigate two major issues. First, it will analyze interconnection of safety nets and universal banks in the lower- and middle-income countries (LMIC). Second, it will look into interdependence of the safety nets’ features and the types of the financial systems. It will argue that safety nets’ breadth and depth should be influenced by the structure of the financial system. Universal banks and safety nets in lower- and middle-income countries The 20th century witnessed universal banks and safety nets spreading across the LMICs. The explanation of this phenomenon is complex as universal banks and safety nets developed independently, but definitely influenced and reinforced each other in the LMIC markets. ...
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...covered by their insurance policies either short term, medium term or long term. 1. Commercial risks: Here, there is insolvency of the buyer and also the failure of the buyer to pay within a specific period of time i.e. 6 months after the due date for the goods that are delivered to and accepted by him/her. In more details, they cover the risk of the buyer being unwilling to accept or pay for the goods which have already been shipped or delivered which isn’t due to the quality dispute. 2. Non-commercial risks: Under this category, there is economic risk, political risk and other unforeseeable events. Starting with economic risk, the risks that are covered include blockage or delay in the transfer of payments to Malaysia and also the cancellation or not renewing the valid import and export licenses. Imposition of import restrictions in the country of the buyer after the goods have been delivered or shipped is also covered under the economic risk. With unforeseeable events, it means any causes of loss happening or occurring outside Malaysia which are beyond either the buyer or exporter’s control. Political risks too are covered. Here there is war between Malaysia and the buyer’s country, revolutions and other kinds of disturbances for example riots in the country of the buyer. There is protection of losses that may arise from the inability to convert for example the profits, dividends and loan repayments that are received in the local currency because of delays, any changes...
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...NBER WORKING PAPER SERIES THE GRAVITY EQUATION IN INTERNATIONAL TRADE: AN EXPLANATION Thomas Chaney Working Paper 19285 http://www.nber.org/papers/w19285 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 August 2013 I want to thank Fernando Alvarez, Michal Fabinger, Xavier Gabaix, Sam Kortum, Bob Lucas, Jim Tybout, Jon Vogel and seminar participants in Berkeley, Bilkent, Bocconi, Boston University, Chicago, Erasmus, Hitotsubashi, LBS, Louvain-CORE, LSE, the NY Fed, Oxford, Princeton, Rochester, Sciences Po, Toulouse, UBC Vancouver, Yale and Zurich for helpful discussions, and NSF grant SES-1061622 for financial support. I am indebted to Jong Hyun Chung, Stefano Mosso and Adriaan Ten Kate for their research assistance. During the last year, I have received compensation for teaching activities from the Toulouse School of Economics, as well a research grant from the National Science Foundation (SES-1061622), in excess of $10,000. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2013 by Thomas Chaney. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit...
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...DO PURE MONOPOLIES EXIST Page 2 Do Pure Monopolies Exist? Thesis Statement: According to the Essentials of Economics textbook a monopoly is defined as "a market structure in which the number of sellers is a small that each seller is a small that each seller is able to influence the total supply, and the price of a good or service. My essay is going to talk about if I agree if pure monopoly exist. Do I agree that pure monopoly exist actually, I do not agree totally with this statement. I believe that pure monopoly can exist up until another company or companies replace and create a competitive market that can cause the fixed prices to fluctuate. A natural monopoly is a firm with such extreme economics of scale that once it begins creating a certain level of output, it can produce move at a lover cost then smaller competitor. "Natural monopolies occur when, for whatever reason, the average cost curves decline over a relevant span of output quantities. (Spark notes Editors, n.d.) A monopoly is different from competitive firms in that it is not a price taker. Because it's only supplier in the market, it faces a downward sloping demand curve, the market demand curve. As a result, the monopoly is free to choose its price and quality according...
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...have made a significant achievement in social and economic development during the past two decades of renovations. The road to success was not always smooth, and although regional integration presents many benefits, there are several disadvantages to that approach. The below analysis will reflect on few of them to present the main challenges in developing countries integrated under the Association of Southeast Asian Nations (ASEAN). Disadvantages of Regional Integration Today’s business world perceives regional integration as a positive outcome for countries within geographical region. As with every aspect there are several disadvantages to regional and economical integration. Countries switch to tariff free imports of same goods, but the tariffs on goods from the outside remain. As a result economists notice a less efficient use of resources. Oftentimes, the goods produced within the region are of a much lower quality than those imported from the outside. In political aspect, governments loose tax revenue from a tariff free trading. Significant amount of revenue comes into the country’s government from import tariffs. Removal of them causes decrease in available capital. The effect on government’s spending programs could have a further negative impact on country’s development (Openbook, 2011). Other challenges with regional integration include: equality between members, ways to deal with economic disruptions, redistribution of resources, and political issues...
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...financial crises are major disruptions in financial markets characterized by sharp declines in asset prices and firm failures. Most people think that the financial crises result from the subprime crises. Investors have no confidents on the mortgage-backed securities. Six categories of factors play an important role in financial crises Asset market effects on balance sheet: A sharp decline in the stock market is one factor that can cause a serious deterioration in borrowing firms’ balance sheets. In turn, this deterioration can increase adverse selection and moral hazard problems in financial markets and provoke a financial crisis. On other side, the unanticipated declines in the aggregate price level decrease the net worth of firms. Debt payments are contractually fixed in nominal terms; an unanticipated decline in the price level raises the value of borrowing firms’ liabilities in real terms but does not raise the real value of firms’ assets. A sharp drop in the price level therefore causes a substantial decline in real net worth for borrowing firms and an increase in adverse selection and moral hazard problems facing lenders. Since the uncertainty about the future value of the domestic currency in developing countries, many nonfinancial firms, banks, and governments in developing countries find it easier to issue debt denominated in foreign currencies rather than in their own currency. Deterioration in financial institutions’ balance sheet: Financial institutions play...
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...total amount spent by households in the market for goods and services. It also equals the total wages, rent, and profit paid by firms in the markets for the factors of production. 2. Why is it desirable for a Country to have GDP? Give an example of something that would raise GDP and yet be undesirable It is desirable for a country to have a large GDP (other things equal) because people could enjoy more goods and services. But GDP is not the only important measure of well-being. For example, laws that restrict pollution could cause GDP to be lower by preventing economic agents from undertaking GDP-enhancing but polluting activities. However, stricter emission standards might also raise the demand for the newer technology, such as new cars and filter systems. Destruction through natural disaster may increase GDP in the medium run as the reconstruction effort is measured. In the short term, only any disruption to economic activity affects the GDP measure whilst the destruction itself does not enter the measure at all. Yet the natural disaster is an undesirable event that lowers our welfare. 3. Which do you think has a greater effect on the consumer price index: a 10% increase in the price of chicken or a 10% increase in the price of caviar? Why? A 10% increase in the price of chicken has a greater effect on the consumer price index than a 10% increase in the price of caviar because...
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...decades, and the forecast manifested by International Monetary Fund indicated that American stock market indexes, in spite of the global sell-off, remain at relatively steady levels. On the other hands, Irwin also makes his own predictions about the future obstacles for America. In his words, either the U.S. keeps acting as an island of economic, or the situation goes down that no longer to sustain its domestic economy order, the negative impact will be generated, such as rapid appreciation of currency as well as the constantly growing debts. As a result, Irwin suggests that the best way to improve global economy is depend on the efforts contributed by the rest of world rather than by U.S.’s. Response: In my opinion, I agree with the author’s final analysis of not relying America as the last resort. As he stated “Not one of the problems that have flared across financial news tickers in 2016 is completely new surprising.” (Irwin, 2016), so I consider those factors, causing the economy crisis are basically some of the old problems that has been existing in global economy for a while, and since the global business is is an interconnected network, a disruption happens in one country could...
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