...Case 19 | Morris de Minas | By Ian H. Giddy | Vijak Pongtippun Viwan Wongviriyawong Wenyu | Introduction In August 1984, Morris Mini Mainframe Computer Company in New Jersey was looking for the most desirable financing alternative for Morris de Minas Ltda, its Brazilian affiliate, in the working capital needs of 82,650 million cruzeiros or US $39,320,000; at the exchange rate of 2,102 cruzeiros per US dollar. David Albuquerque, the vice-president of finance for the Latin American Division, was in charge of exploring possible financing arrangements and preparing a financing alternative plan. Albuquerque believed that Brazilian expected inflation rate and tax legislation, and the future exchange rate would play major roles in his analysis although it was not easy to predict. However, as a company’s consultant, we would help Mr. Albuquerque make the most effective decision that associated with the least risk possible. Company Background Morris was a manufacturer of super-mini computers located in Hackettstown, New Jersey. As it had gone globally a long time ago, by 1983, the revenue the company earned mostly from outside the United States In 1971, Morris (USA) entered the Brazilian market by assembling and distributing computers in Belo Horizonte, in the state of Minas Gerais. After its products became known for the high quality in the late 1970s, Morris expanded its market to Brazil to manufacture and distribute a line of super-minis, including a full line...
Words: 3152 - Pages: 13
...Introducing Sociology SSCI210 ABSTRACT Unemployment is very well known in today’s economy. It affects millions of people in different ways. Many people lose their homes, cars, and friends when they become unemployed. People often do not realize the effect of unemployment until it happens to them. There have been many studies and articles on unemployment recently. Unemployment in recent years has risen exponentially due to our economic malaise. The findings of these recent studies are disheartening according to an article in The New York Times. (The Enduring Consequences of Unemployment March 28, 2012 The New York Times) It has been found that people who lose their jobs suffer lasting damage to their earning potential, their health and the prospects of their children. The longer it takes to find a job the deeper the damage appears to be. In a article by the Washington Post The-long term impact of unemployment it has been found that people who are unemployed eventually dip into their savings, retirement funds, and in many cases borrow money to pay rent, bills, and buy the basic necessities to survive such as groceries and everyday household products. With the prices of gas, food and many other products on the rise it seems like people who are unemployed will continue to struggle even after finding a job. According to studies nothing has been seen like this since the Great Depression when unemployment was at its highest in American history. Many people will accept...
Words: 569 - Pages: 3
...e3de3dde3dwcccccccc 1. How does the existence of the underemployed and the discouraged workers skew (distort) the meaning of the unemployment data? Consider an unemployment rate of 4%. This means that of the labor force 4 out of 100 people are actively looking for a job and the other 96 some kind of job. These numbers say nothing about the population outside of the labor force, nor the quantity of work performed by those in the labor force. Consequently, the 4% does not capture the the part of the non-labor force that would migrate to the labor force if getting a job were easier (discouraged workers), nor does it capture the desire of, for example, a part time worker who wants a full time job (under-employed workers). So, the potential amount of labor that workers might like to sell to businesses is not fully captured in the unemployment rate. It is in this sense that the meaning is skewed. 2. Why does full employment never result in 0% unemployment? While the unemployment rate reaches relatively low levels during expansions, it never falls to 0 percent. In principle, full employment is thought of as occurring when ALL resources (especially labor) are engaged in production, in practice, full employment generally corresponds to an unemployment rate of about 5 percent. This 5 percent unemployment rate, often termed the natural unemployment rate, includes both frictional and structural unemployment. 3. Of the types of unemployment noted, which do you...
Words: 870 - Pages: 4
...FACULTY OF MANAGEMENT AND ADMINISTRATION PUBLIC SECTOR MANAGEMENT TRAINING PROGRAMME (PSMTP) MPSM 5TH COHORT PSM 542: INTERNATIONAL TRADE AND FINANCE GROUP ASSIGNMENT 1 Candidate's Reg. Numbers R118475MP – LUSITO NEEMA FERDINAND R118472MP – LIMBE RUTH COSMAS R118474MP – MATATA JIMMY AVUTIA LECTURER. MR CHARLES MAKANYEZA Due date; 15th October, 2012 Question Two Discuss the various factors that determine the exchange rate regime. Introduction This paper is an attempt to discuss various factors which determine the exchange regime in relation to the international trade. The paper will provide a brief overview of the exchange rate regimes in the international trade, define key terms. It will also explore the various types of exchange rate regime practiced in the international and finally it will delineate the main factors that determine the exchange rate regime. Overview of exchange rate in the International trade. The choice of an appropriate exchange rate regime for developing countries has been at the center of the debate in international finance for a long time. The steady increase in magnitude and variability of international capital flows has intensified the debate in the past few years as each of the major currency crises in the 1990s has in some way involved a fixed exchange rate and sudden reversal of capital inflows. While the debate...
Words: 3091 - Pages: 13
...returns (%)1,2 u.s. Economic indicators Inflation Core Inflation Real GDP U.S. Cash U.S. Intermediate Treasury3 U.S. Long Treasury4 U.S. TIPS U.S. Aggregate U.S. Short Duration Gov’t/Credit U.S. Long Duration Gov’t/Credit U.S. Investment Grade Corporate U.S. Long Corporate U.S. High Yield U.S. Leveraged Loan World Government Bond (local) World ex-U.S. Government Bond (local) World ex-U.S. Government Bond Emerging Market Sovereign Debt Emerging Market Local Currency Sovereign Debt Emerging Market Corporate Debt U.S. Municipal U.S. Large Cap U.S. Large Cap EPS Growth U.S. Large Cap Dividend Yield U.S. Large Cap P/E Return Impact U.S. Mid Cap U.S. Small Cap U.S. Large Cap Value U.S. Large Cap Growth Europe ex-U.K. Large Cap (local) Japan Large Cap (local) U.K. Large Cap (local) EAFE Equity (local) EAFE Equity Emerging Market Equity Asia ex-Japan Equity Global Equity U.S. Private Equity5,6 U.S. Direct Real Estate (unlevered)5,6 U.S. Value Added Real Estate (unlevered)5,6 European Real Estate (unlevered, local)5,6 U.S. REITs Global Infrastructure5,6 Hedge Fund—Diversified5,6 Hedge Fund—Event Driven5,6 Hedge Fund—Long Bias5,6 Hedge Fund—Relative Value5,6 Hedge Fund—Macro5,6 Commodities (spot)5 Gold (spot) as of october 31, 2011 rationale 3.25 High unemployment and deleveraging of the public and private sectors to keep inflation low overall, while aggressive reflationary central bank policy and rising import prices risk higher inflation over the medium to longer term. 2.75 Strong...
Words: 5101 - Pages: 21
...he price level grows in excess of hundreds of percentage points T per year. B) oneyʹs function as a medium of exchange is enhanced. M C) t causes an economy to suffer slow growth. I D) oney loses value so rapidly that firms and individuals stop M holding it. 2) hich of the following would you expect to lead to increases in W domestic interest rates and an appreciation of the domestic currency? A) xpansionary monetary policy e c B) ontractionary monetary policy C) xpansionary fiscal policy e D) oth B and C. B 3) eteris paribus, an unexpected increase in the current or actual rate of C inflation will cause A) he long run Phillips curve to shift leftward. t B) he short run Phillips curve to shift upward. t C) he unemployment rate to decrease (a movement along the short t run Phillips curve). D) xpectations of future inflation rates to be revised downward. e 4) he interest rate on a Treasury bill that you pay $980 for today that T matures in one year and pays $1,000 is A) percent. 2 B) percent. 4 C) percent. 3 D) percent. 1 5) he international trade effect states that T A) n increase in the domestic price level will raise net exports. a B) n increase in the domestic price level will lower net exports. a C) n increase in the domestic price level will raise exports. a D) n increase in the domestic price level will lower imports. a 6) cott is a woodworker and charges $125 an hour for his time ...
Words: 4587 - Pages: 19
...services, investment is different than normal investing it doesn’t mean investing in stocks or bonds; it actually means that businesses are spending money on factories and equipment for production. Government spending is money the government spends on goods and services. Net exports are when foreigner spends money on goods and services that are made in the United States. What does real gross domestic product GDP mean? The market value of final goods and services produced in an economy stated in the prices of a given year, also nominal GDP adjusted for inflation. (Colander, 2008). Unlike nominal GDP, real GDP can account for changes in the price level, and provide a more accurate figure. Inflation is a continual rise in the price level. Often referred to as a “constant-price”, inflation-corrected GDP or constant dollar GDP. (Colander, 2008) Inflation is the change of price levels over time. There are many cause for inflation, one example is when the government prints a large amount of money to help deal with a crisis. When this happens prices are raised to keep up with the amount of surplus spending. Unemployment occurs when people do not have jobs and have been actively looking for work for the past 4 weeks. Unemployment rate is defined as a percentage of those in the labor force that is unemployed. (Colander, 2008) Interest rate is the rate at which...
Words: 658 - Pages: 3
...Market for Inflation-Linked Products in China How serious is the inflation in China? According to official statistics, inflation rate in China is about 3%~4% at present, which seems very moderate. But this result contrasts with the feeling of Chinese people and is considered incredible. Other evaluation methods are proposed by economists, showing quite different outcomes. In the report Research of the inflation degree in China, Yanchen Qi selected prices of diesel and corn as samples and reached the conclusion that current inflation rate is nearly 30%. In addition, the compound inflation rate from 2000 to 2011 can be estimated using the price of pork, which increased from RMB 6 to RMB 15 per kilogram, with a compound inflation rate of 9.6%. What causes the inflation? External Factors Subprime mortgage crisis. This has led to the implementation of quantitative easing monetary policy in mainstream global currency markets, especially the Federal Reserve Bank (QE1 and QE2 totalled 2.3 trillion dollar). Its influence to China has two main aspects: Firstly, massive inflow of hot money. China's economic stability and prosperity gives a strong expectation of RMB appreciation. As a result, hot money flows into China through false declarations of trade, FDI and underground banks, pushing up asset prices. Secondly, “Dollar Flooding” forces China to increase money supply passively because exchange rate mechanism is not fully marketoriented, bringing about asset price inflation and price...
Words: 759 - Pages: 4
...DEL 2 SCHOOL OF TECHNOLOGY SECOND YEAR DIPLOMA IN TECHNOLOGY (ELECTRONIC ENGINEERING) DAY VENUE DK W M O N D A Y DK 8 PA 001 ATGE2064 NG (A) ATGE2064 NG (B) 8 9 ATGE2033 MR. TEO KC (L) 10 11 12 1 2 3 ATEL2344 MS. KING (L) 4 5 6 7 8 9 C 301 T U E S D A Y C 300 Q 105 PA 001 LAB PRACTICAL (ALT WK) ATEL3314 (A1/A2) MS. BONG HL / MR. PANG JY LAB PRACTICAL (B) ATEL2344 / ATEL3373 MS. KING YC / MS TAY LC ATEL2344 KING (L) LAB PRACTICAL (ALT WK) ATEL3314 (B1/B2) MS. BONG HL / MR. PANG JY ATEL2344 KING (A) Q 105 W E D N E S D A Y PA 001 PA 002 ATEL3314 MS. BONG (L) ATEL3373 TAY (A) ATEL3314 BONG (B) ATEL3314 BONG (A) ATEL3373 TAY (B) ATGE2064 MS. NG CK (L) C 300 T H U R S D A Y Q 105 PA 001 P 102 LAB PRACTICAL (A) ATEL2344 / ATEL3373 MS. KING YC / MS. TAY LC ATEL3314 BONG (L) ATGE2064 NG (L) ATEL2344 KING (B) ATGE2064 (A/B) (ALT WK) NG CK / HO MY / KONG KY Q 105 F R I D A Y PA 001 ATEL3373 MS. TAY LC (L) ATGE2033 MR. ONG (A) ATGE2033 MR. ONG (B) S A T U R D A Y ATGE2033 MATHEMATICS IV – MR. TEO KOK CHAU (L) / MR. ONG EWE KHENG (T) ATGE2064 ENGINEERING MATERIALS – MS. NG CHUI KIM ATEL3314 ELECTRICAL TECHNOLOGY AND CIRCUITS – MS. BONG HUOY LIH ATEL3374 MICROPROCESSORS – MS. TAY LEE CHOO ATEL2344 ELECTRONIC INSTRUMENTATION AND COMMUNICATIONS – MS. KING YEONG CHING Sem 1, 2011/12...
Words: 276 - Pages: 2
...Answers to Textbook Questions and Problems CHAPTER 1 The Science of Macroeconomics Questions for Review 1. Microeconomics is the study of how individual firms and households make decisions, and how they interact with one another. Microeconomic models of firms and households are based on principles of optimization—firms and households do the best they can given the constraints they face. For example, households choose which goods to purchase in order to maximize their utility, whereas firms decide how much to produce in order to maximize profits. In contrast, macroeconomics is the study of the economy as a whole; it focuses on issues such as how total output, total employment, and the overall price level are determined. These economy-wide variables are based on the interaction of many households and many firms; therefore, microeconomics forms the basis for macroeconomics. 2. Economists build models as a means of summarizing the relationships among economic variables. Models are useful because they abstract from the many details in the economy and allow one to focus on the most important economic connections. 3. A market-clearing model is one in which prices adjust to equilibrate supply and demand. Market-clearing models are useful in situations where prices are flexible. Yet in many situations, flexible prices may not be a realistic assumption. For example, labor contracts often set wages for up to three years. Or, firms such as magazine publishers change their prices...
Words: 58794 - Pages: 236
...with the realized or ex post rate of inflation; whereas the ex-ante (or expected) real interest rate corrects the nominal interest rate for expected inflation. As a lender, you care about the real return on your investment, which is the return that measures your increase in purchasing power between two periods of time. If you invest $1, you sacrifice $1 1+i real goods now, where P(t) is the price level. In 1 year, you get back , where i is the P(t) P(t+1) nominal rate of interest. We calculate the real return by dividing the real amount you get back by the real amount that you invest. Thus, if rep is the ex post real rate of return and ex post real interest rate, we have 1 + r ep ⎛ 1+i ⎞ ⎜ P(t+1) ⎟ ⎠ = (1 + i ) = ⎝ ⎛ 1 ⎞ ⎛ P(t+1) ⎞ ⎜ P(t) ⎟ ⎜ P(t) ⎟ ⎝ ⎠ ⎝ ⎠ Notice that the real rate of interest depends on the realization of the rate of inflation because P(t + 1)/P(t) = 1 + π(t + 1), where π(t + 1) is the rate of inflation between time t and t + 1. For simplicity, we drop the time notation and simply write 1 + r ep = If we subtract 1 from each side, we have (1 + i) (1 + π) r ep = which is often approximated as (1 + i) (1 + π) i-π = (1 + π) (1 + π) (1 + π) rep = i – π The approximation involves ignoring the term (1 + π) in the denominator, which is close to 1 if inflation is not too high. Thus, the ex post real interest rate equals the nominal interest rate minus the actual rate of inflation. Because the inflation rate is uncertain at the time an investment...
Words: 32380 - Pages: 130
...low, this also affects the return on investments for CDs, investments such as stocks and, other saving accounts. Furthermore, when interest rates are low, people will not be willing to invest with banks because of low or little ROI. This can further damage the deposit reserve by limited the amount of money the banks can loan at any given period. Respond to Ms. Lee: Maintaining the right amount of taxation is a very difficult subject that directly deals with taking hard earned money away from consumers. Raising taxes can have a few benefits. First, raising taxes will help to decrease the money supply by allocating the government a higher percentage of workers’ wages to help reduce the national debt. In addition, inflation can greatly be reduced if the government relied more on taxation than borrowing...
Words: 510 - Pages: 3
...US and in the South. Positions decreased in mining and logging careers, this trend may stay on a decline due to the change of public interest. We are trying to conserve trees so logging positions are not as in high demand as they have been historically, we use more electronic communication than paper and we recycle, this all contributes to the decline of the logging demand. We are still building houses, and there is a need for logging to provide wood for homes, but even there we are using recycled materials and finding alternatives. Mining industry is also going to stay on the decline due to finding alternatives to energy. We are moving away from coal energy and moving toward solar, wind and other alternative sources of energy. US inflation rose by the most in August 2012 than it has since 2009. This is due to the higher fuel bills that consumers are paying at the gas pumps. The US Labor department stated that 80% of the increase was...
Words: 1528 - Pages: 7
...1.1 Introduction: Rate at which one currency may be converted into another. The exchange rate is used when simply converting one currency to another currency or for engaging in speculation or trading in the foreign exchange market. There are a wide variety of factors which influence the exchange rate, such as interest rates, inflation, and the state of politics and the economy in each country it also called rate of exchange or foreign exchange rate or currency exchange rate. 1.2 Objective of the Report: The primary objective of this report is to know the over functions of government in foreign exchange market. But the objective behind this study is something broader. Objectives of the study are summarized in the following manner: • To describe the exchange rate systems used by various government. • To explain how government can use direct and indirect intervention influence exchange rates. • To study existing government control over exchange rate system. • To know how government can affect economic conditions. • To have some theoretical exposures that will be helpful for our future career. 1.3 Methodology: For preparing this report, we have undergone group discussion, collected data from internet. We also studied different circulars and reference books on this topic. We hope these criteria will be enough to find out different picture of government influence on exchange rate system. 1.4 Limitations of the Study: 1. The time, 1(One) week...
Words: 1724 - Pages: 7
...The Age of Financial Repression CommentsTILBURG – Following his re-election, US President Barack Obama almost immediately turned his attention to reining in America’s rising national debt. In fact, almost all Western countries are implementing policies aimed at reducing – or at least arresting the growth of – the volume of public debt. CommentsIn their widely cited paper “Growth in a Time of Debt,” Kenneth Rogoff and Carmen Reinhart argue that, when government debt exceeds 90% of GDP, countries suffer slower economic growth. Many Western countries’ national debt is now dangerously near, and in some cases above, this critical threshold. CommentsIndeed, according to the OECD, by the end of this year, America’s national debt/GDP ratio will climb to 108.6%. Public debt in the eurozone stands at 99.1% of GDP, led by France, where the ratio is expected to reach 105.5%, and the United Kingdom, where it will reach 104.2%. Even well disciplined Germany is expected to close in on the 90% threshold, at 88.5%. CommentsCountries can reduce their national debt by narrowing the budget deficit or achieving a primary surplus (the fiscal balance minus interest payments on outstanding debt). This can be accomplished through tax increases, government-spending cuts, faster economic growth, or some combination of these components. CommentsWhen the economy is growing, automatic stabilizers work their magic. As more people work and earn more money, tax liabilities rise and eligibility for government...
Words: 776 - Pages: 4
