Since the Great Depression, many Keynesian economists have been arguing that their basic approach is the best way to deal with issues that could have a long-term impact on the economy. At the heart of this basic philosophy, is the belief that when spending in the private sector is stagnant, the public segment can be able to deal with these challenges. The reason why, is because the government could engage in actions such as favorable monetary and fiscal policy. If this kind of approach is taken, it will help to provide additional demand. Once this occurs, it means that they can begin to stabilize the economy and prevent negative calamities from taking place. This is significant because, these basic ideas have often been used by economists throughout the decades to illustrate how this is one of the major tools that can be utilized to deal with a host…… [Read More]
One of the most fascinating aspects of Chapter 4 is how the Marxists theories provide insights into how tightly economic, geopolitical and societal forces interact to redefine the foundational definition of value in a society. What's most fascinating about Marxism relative to capitalism is that fact that the former tends to see economic ecosystems as manageable and even predictable. Capitalism shows that economic ecosystems, while defined through constructs and frameworks at the macro- and micro-level, is best managed with a laissez-faire based approach to orchestrating commerce. To the Marxist, laissez-faire economic systems seem fertile for exploitation and the monopolistic aggregation of entire industries. To the capitalist, Marist economies lack the freedom to allow resources to flow to and fund innovation and needed products that a turbulently changing market require. The dichotomy of egalitarianism relative to free market dynamics is a fascinating one, and it's clear that the dividing lines…… [Read More]
ffective measurement of economic performance and when the government should stay (or not stay) out of things is discussed at the end of the chapter.
Chapter 16 Web Activities
1. conomist Russ Roberts and filmmaker John Papola have created a video of a rap-off between economists John Maynard Keynes and F.A. Hayek. View the video at http://www.econstories.tv/. Read the lyrics on the same page, and then read the line-by-line discussion of the lyrics at the Daily Kos website, accessible at http://www.dailykos.com/story/2010/3/1/8929/21462.
a. Summarize the basic arguments of Keynes.
Keyne's viewpoint on macroeconomic theory is government intervention is the solution, and not the problem, and that it is possible to prevent the massive swings in the economy that are currently the norm with massive swings back and forth from boom and bust rather than staying within a happy medium between the two. Any Keynesian would point to the Great Depression and…… [Read More]
At which point, they would consume even more of the different services that are being provided. This would have an impact on spending, as consumers would use the added savings to purchase additional services from the company. This shows that the character of human wants requires giving customers greater value. Once this takes place, is when they will begin to purchase other products. As a result, the assumptions about the character of human wants are: based upon financial benefits and added value that is provided. These elements are important, because they are the most significant factors that will shape consumer buying decisions. ("A Closer Look at the Demand Curve," 109 -- 116)
What this shows about consumer wants for various items, is that they are constantly changing and that any kind purchasing decisions are based upon two factors (income and value). Where, consumers will seek out those products that can…… [Read More]
hen there is no obvious solution to a particular problem, the recommended course was to extend the Neoclassical paradigm by incorporating new concepts into it that would make the subject matter amenable to economic analysis" ("The Chicago School," 2006, the New School) Recessions are short-term pain that can cause long-term gain, provided people 'wait them out' and provided the government has a minimal role in the economy, except to stabilize the monetary supply.
The Chicago School is based in a belief that people are rational beings and are very good at working out what is in their best long-term interest, unlike Keynesian theory that proposes that short-term personal decisions like hoarding may seem rational but could actually be irrational in the 'macro' scheme of things. (Klemens, 2003: 2). The Chicago School economists were later accused of economic imperialism in their advice to the orld Bank and International Monetary Fund. For…… [Read More]
Even when forced to rework his model to allow for some private investment, he argued that it wasn't as efficient as government spending because private investors would be less likely to undertake/overpay for unnecessary works in hard economic times" (Beattie 2010). For the world to extricate itself from the Great Depression, said Keynes, the government must intervene in the market.
Keynes' rationale is one reason that the current administration's stimulus package in response to the recent economic downturn has been termed Keynesian in nature. Keynes advocated spending money and increasing the deficit during recessions, and avoiding deficits during expansionary periods to stem inflation. Because of his fear of a 'hoarding' effect Keynes also tended to view a higher level of overall employment as a greater necessity than classical economists. Due to Keynes' influence, the federal government increased in size, nearly doubling within a few scant years: "during the 1920s, there…… [Read More]
The competitive equilibrium
The competitive general equilibrium tries to give an understanding of the whole economy using a "bottom-up" approach, starting with individual markets and agents, as a microeconomic approach. The rational expectations theory is based off this microeconomic approach, where it assumes that each individual agent is capable of quickly adapting to market changes and solving for the competitive equilibrium. This bottom-up approach and the concept of quick adaptation have been the source of much criticism about the rational expectations theory.
Application of rational expectation to aggregate behavior
The main idea behind the rational expectations hypothesis is to consistently extend the principle of individual rationality from the problem of the allocation of resources.
The problem is the hypothesis's application to aggregate behavior. Even if all individual agents have rational expectations, the representative corporation/household/industry describing these behavior may not collectively make efficient use of all given information. Hence,…… [Read More]
Supply and Demand Economic Theory
Discuss supply and demand economic theory as it applies to costs for diagnosis and treatment of obesity-related disease.
Healthcare services for obesity-related illnesses have a 'demand curve', just like other commercial services and goods; this demand curve slopes downwards. The same demand law that works for entertainment, clothing, automobiles, and other services and goods also applies here; movements along this demand curve take place with respect to consumer responses to price changes in obesity-related care services. It is assumed that healthcare, which includes doctor visits, hospital bills, medication, and other health services, are measurable in healthcare units (Bovbjerg, Dorn, Hadley, Holahan and Miller, 2006).
The method of healthcare financing complicates demand curve analysis for healthcare related to obesity. Nearly 80% of healthcare linked to obesity is funded by third-party financiers, which include government initiatives and private insurance firms (e.g. Medicaid and Medicare). While movements are…… [Read More]
The debate that summarizes mankind involves determining which particular means of existence is best. Social, political and economic constructs have been developed and implemented throughout the last thousand years. Throughout this time, different forms of government and social organization arose out of idealistic thought and well reasoned application of natural and human laws. Today, this potential has been realized in our current forms of society. The estern world lives in a democratic, or so it seems, state of being. Is this best? hat is the best? Is there even a best way to go about doing this?
The validity of any proposed social, economic or political theory is required in order for a collective group of people to move forward and adopt the principles that they suggest. Anarchy and anarchism are terms that are gaining relative popularity in today's hectic and turbulent world. American interests are very wide and…… [Read More]
He would be faced with deciding whether he must spend all his available resources on goods or services, or whether he must save some of his income so that he would be able to finance some of his needs of his future. When he is taken as a labor resource, he must make the decision whether he must use his time in working for his pay, or whether he must spend it on sleeping and other leisure time activities. ("Decision making using marginal analysis," n. d.)
Similarly, when he is a labor resource, he must decide how much of his time he must spend on education, so that he may be able to maximize his life earnings. On the other hand, if he were an entrepreneur, then he must make the decision on how many people he must hire, or how much he must spend on acquiring a new product…… [Read More]
Both Keynes and Kalecki use Marx's theories as a starting point but quickly moved into new ways of thinking, particularly with regard to effective demand being oriented toward the demand-side. Marx had remained rooted in supply-side demand function, rejecting Say's Law only to note that demand did not necessarily meet supply.
Marx, K. (1867). Das kapital: A critique of political economy.
Mandel, E. (1995). Marx's theory of crises. International Viewpoint. Retrieved April 24, 2010 from http://www.internationalviewpoint.org/spip.php?article289
Argitis, G. (2003). Finance, instability and economic crisis: The Marx, Keynes and Minsky problems in contemporary capitalism. University of Crete working paper no. 0307.
Green, F. (1991). Marx, Malthus and wages: A comment on Cotrell and Darity. History of Political Economy. Vol. 23 (1) 95-100.
Magdoff, F. & Magdoff, H. (2004). Disposable workers: Todays' reserve army of labor. CBS Marketwatch. Retrieved April 24, 2010 from http://findarticles.com/p/articles/mi_m1132/is_11_55/ai_n6137106/
Sebastiani, M. (1989). Kalecki and Marx…… [Read More]
Karl Marx was one of the most popular and prominent economists the society has ever produced. Born in 1818 in Prussia, Marx would come to activate in fields such as sociology, economy, history or journalism. In his economic activity, he uncovered a series of economic principles regarding the functioning of the society and the economy in the context of capitalism, commonly integrated under the generic umbrella of Marxism. The Marxian theories draw from the Marxist ideology, yet they are considered ideologically independent (oemer, 2002).
The Marxian economic theories oppose the previous theories of Adam Smith, who relied of productivity and wages; Marx, on the other hand, promoted the role of labor to attaining economic gains. Marx contends that the specialization of the labor force leads to a decrease in the wages and that ultimate value of the goods and services is not able to reflect the value of…… [Read More]
Economic Impacts of egulation
egulation is a written instrument that contains rules with the force of law (Ogus, 2004). egulation as a process involves monitoring and enforcing rules, established through primary or delegated legislation. egulation usually creates, constrains or limits a right. In addition, regulation creates and limits a duty besides allocating responsibilities (Ogus, 2004). egulation may take several forms depending on its application. These includes legal restrictions made by the government, contractual obligations, which binds several parties together, self-regulations by industries, third party regulation, co-regulation, market regulation, certification and accreditation
egulation made by a state tries to produce outcomes that might not occur (Ogus, 2004). In addition, it attempts to prevent or produce outcomes in various places to what might occur. Through this, regulation becomes an implementation object of policy statements. Examples of regulation include controls on prices, market entries, wages, pollution effects, employment of particular people within certain…… [Read More]
There are a number of different metrics that can help to measure the health of an economy. The GDP is one of those numbers, and can be obtained from the Bureau of Economic Analysis. Following a decline of 2.6% in 2009, the GDP grew in 2010 by 2.9%. GDP rates fluctuated by quarter, with a low of 1.7% in Q2 following by escalating growth in the last two quarters. This represents a slow recovery from the steep declines of 2008-2009. Another measure of economic health is unemployment. The current unemployment rate from the Bureau of Labor Statistics is 9.0%, a decline of 0.4 percentage points from December. This rate is historically high, it is lower than at any point in the past year, again showing a sign of slow recovery. A third measure of economic health can be found in the inflation rate. The best measure of inflation is…… [Read More]
Unfortunately most growth oriented economic policies such as "supply-side" economic policies tend to exacerbate inequality. A greater role of the government in the economy such as increased taxation on the rich can reduce inequality. Inflation and unemployment are usually inversely proportional in most economies, i.e., increase of money supply through deficit financing reduces unemployment but increases inflation while tight monetary policies reduce inflation but increase unemployment. According to a number of analysts, a major cause of terrorism in the world is an acute sense of deprivation among a large section of the population. Economic measures can, arguably prove more effective in rooting out terrorism than military action.
What, How and for Whom to Produce:
In 'free market economies' decentralized decision making by individuals and firms based on consumers' desires (which determine the price of goods) and the profit motive determine what goods are produced and in what quantities.…… [Read More]
Source: Kelly, Herring (2012).
Fig 3: France Construction Growth ate (%)
Source: Kelly and Herring (2012)
Economic theory points out the factors leading to the decline in the construction output in France. Economic theory argues that the changes in demand for construction activities may be due to several economic factors such as changes in Gross National Product, and changes in interest rates. (Finkel, 1997). Akintola and Martin (1994) argue that the level of a national economy is a primary factor that could affect the construction demand in a given economy. Typically, "there is a relationship between construction demand and the growth in GNP, as a measure of the economic well being of a nation." (Akintola, and Martin 1994 P. 9). During the period of economic prosperity, there is a general increase in demand for consumer goods which triggers up the demand for construction activities.…… [Read More]
Even though the housing market is slowing, the article speculates that it may take six to eight months before sellers accept that the market has softened and reduce their prices. This demonstrates the economic theory that the supply relationship is a factor of time. Suppliers do not always react quickly to a change in demand or price, but eventually they must. The article suggests that demand will decline 3.5% next year, but that median home prices will still increase by 5%.
Suppliers are beginning to react to falling demand through a decline in price increases and incentives which are really indirect price decreases. That's why this is referred to as a "cooling off" period in the article which mentions that some condo buyers are being offered a car to make a purchase of a condo. The use of incentives may be viewed by the suppliers as a way to mask…… [Read More]
The recession of 2008-2009 and the subsequent government responses provides a good test for economic theories. There are no controlled experiments in economics, so we can only work with case studies in order to understand how economies work. A good starting point is to consider the issue through multiple different lenses, so that we can understand how the crisis occurred and what prescriptions might be best suited for response either to address the root problems or to engage in prevention. This paper will consider the works of Marx, Schumpeter and Keynes in analyzing the financial crisis. All three of these men would have been able to understand its causes, but likely would have taken very different approaches to solving the problem.
The second issue at hand is the question of the future of capitalism. We have a pretty good sense at this point of what the response of…… [Read More]
Postal Service (USPS) operates at a loss but its closest competitors -- UPS and FedEx -- both operate at a profit. Suggest how fixed costs have contributed to the situation of the USPS. Provide support for your response.
I would suspect that the fixed costs of contributing to employee's retirement funds (Risk Analysis Research Center, 2009, p. 4) and also their restriction from closing local offices (Slentz and McCann, 2009, p. 12) contributes to higher fixed cost at USPS than FedEx because FedEx is not unionized and while UPS is unionized, and thus experiences a fixed cost that is incurred to the level of union contracts, those contracts are more negotiable for UPS than USPS, and nonexistent or fluid for FedEx. Furthermore while union contracts probably affect the rate of closure for physical facilities for UPS, this would probably be more negotiable than for USPS and…… [Read More]
Economic View of the Death Penalty
In 1972, The U.S. Supreme Court ruled in the case of Furman v. Georgia that the death penalty, as applied in three capital cases in the state of Georgia was "cruel and unusual punishment and in violation of the Eighth and Fourteenth Amendments. (Hastings and Johnson, 2001, paraphrased) A mere four years later the state of Georgia was once against before the Supreme Court in the case of Gregg v. Georgia, a case in which the decision handed down by the court found that the death penalty was in fact constitutional. (Hastings and Johnson, 2001, paraphrased) The objective of this study is to examine the practice of the death penalty from an economic perspective. Towards this end, this study will examine the literature in this area of study. According to a recent report there are several states considering abolition of the death penalty including…… [Read More]
For one reason, the super rich are some of the biggest political contributors, and so, it pays Congress to ensure their continued support and fiscal maintenance. He also uses economic theories and trends to illustrate his point and make the text more credible and believable.
Throughout the book, the author shows not only that he deeply understands his material, but he has the ability to explain it so most readers understand it as well. With all the economic information this book contains, it could be dry and uninteresting, but instead, the author presents facts and figures in a way that shows he understands the material, but also has the ability to explain it to others, which is extremely important in this type of book. It is also essential if the author hopes to have Americans read his book, and act on it, which is clearly one of the author's purposes…… [Read More]
Shift from Central Planning to Market Economy
The Turkish economy is in what might be termed semi-precarious health. It could certainly be worse, but also certainly be better. Since its birth as a nation-state into its current shape in 1923 in the wake of World War I, Turkey has operated a mixed economy, in which both state and private enterprise have contributed to economic development. (Indeed, it is arguable that all country's in the world today have a mixed economy; the United States may be a bastion for private enterprise but many workers also benefit from government money, such as the money awarded by the federal government to private companies in the form of defense industry contracts.) Since the end of World War II, the economy has been transformed from a predominantly agricultural one to one in which industry and services are the most productive and rapidly expanding sectors even…… [Read More]
Economics can be considered as the study of the allocation of scarce resources that have potential alternative uses among the competing and virtually limitless want of consumers in society. The allocation of resources is necessary both at an individual and societal level. Economics considers the manner in which people are organized for economic tasks. Economics is applicable everywhere. Economics should be thought of in all the aspects rather than considering the things in the way they already are. This particular proposal explains the reason cars have their fuel doors on different sides. People line up and fuel their cars at the petrol station. However, it is noteworthy that some cars have their fuel filler door on the side of the driver while others have their fuel filler opening on the side of the passenger. This might be perceived as a normal aspect but is largely linked to economics.…… [Read More]
However, EVA is neither as perfect as claimed by its advocates, nor is it the only performance measure that suggests a path to a superior stock return" (emphasis added) (p. 319).
More importantly, though, while the economic value added measurement approach to financial performance may not be without its detractors, the scholarly literature is consistent in emphasizing the need for such initiatives for companies to remain competitive in an increasingly globalized marketplace today. For instance, in his recent essay, "Profit-Increasing Strategies," Tracy (2006) reports that there are a number of ways for most companies to add value to their product or service. "There are many strategies for generating sales, profitability and wealth in every industry," he advises. "Your ability as an entrepreneur to create a profitable business where no business existed before is the key to your success. In every market, it's usually true that 20% of the businesses earn…… [Read More]
The question is, how does one decide which path is more beneficial?
John Stuart Mill in Utilitarianism in the Philosophy of J.S. Mill, raised similar concerns when he stated:
"…any, even unintentional, deviation from truth does that much toward weakening the truth-worthiness of human assertion, which is not only the principal of all present social well-being but the insufficiency of which does more than any one thing that can be named to keep back civilization, virtue, everything on which human happiness on the largest scale depends" (p. 349).
Considering that human happiness is a subjective commodity that varies for every individual in its "truth," then whether or not one perceives the mommy track trend to be in line with utilitarian principles ultimately depends on one's personal definition of the greater good. From the utilitarian perspective (i.e. Mill), the wishes of the individual must be forsaken for the long-term "big picture."…… [Read More]
This is circular logic that appears to dehumanize our freedom and minimalize our existence. The atomization of the responsible self is unimaginative and restrictive, I'll choose something else to listen to if I have a choice.
Work itself is exploitative in nature. Only when a person can work for himself or herself can exploitation be limited to being self-imposed. Labor and work do not belong to anyone, they are mere expressions of idea, to claim them as a tangible thing is confusing and appears to have a disingenuous motive.
Perfection is in the eye of the beholder and even though there are characeristics of a perfect market such as large amounts of buyers and sellers and a shared responsibility, there is undoubtedly some flaw within the system. Perfect markets would require no exchange of money, only ideas as money itself is a market within itself causing…… [Read More]
traditional, neoclassical school of economic modeling prescribes a "recipe for economic growth." Economic growth is a process of moving resources from low growth, agricultural areas to higher growth, industrial areas. The neoclassical school also does not see anything slowing the progress of moving from low growth to high growth areas. The neoclassical model in the form of Harrod-Domar model assumes that an increase in savings and investment will lead to economic development. Even though productivity is improved employment does not increase and income does not improve so correspondingly demand for products does not occur. Government intervention has hampered economic development by funneling resources into the wrong types of industries. Instead of taking advantage of industries where a country has a relative advantage, resources have gone to industries that the government wants to develop. One area where the removal of restrictions is essential is in the area of international trade. Increasing…… [Read More]
(Major Schools of Economic Thought) This theory was born from the crucible of a Great Depression and a orld ar. Chicago theorists vehemently disagreed. They made the argument that the wealth of nation's increase when the market is allowed to naturally price goods and services. Spending would unnaturally change the prices of these goods, thus changing the reaction of the market to the goods, causing a misallocation of wealth or goods.
According to the Chicago theorists, the role of a government was to make sure individual rights were not trodden upon during market interactions and to mitigate the damage of neighborhood effects. Neighborhood effects are defined by Milton Friedman, the godfather of Chicago Economists, as when, "the action of one individual imposes significant costs on other individuals for which it is not feasible to make him compensate them or yields significant gains to them for which it is not feasible…… [Read More]
disrupting America's economic system is a fundamental objective of terrorists
Even as the world continues to struggle with the terrible shock from the September 11 attacks in New York and Washington, one principle lesson has already become clear: disrupting our economic system is a fundamental objective of terrorists.
Prior to September 11, our economic environment was certainly not immune to terror, in comparison to many other nations; we lived relatively terror-free. Now, however, the aftermath of the terrorist attacks serves as a grim reminder that international relations and security developments can dramatically affect economic performance.
US History is replete with countless examples when macro fundamentals are overtaken by what economists refer to as, exogenous shocks -- surprise events that can profoundly and often unpredictably shift political and economic resources, and send even the most accurate forecasts astray. Commodity shocks, such as the two OPEC jolts in the 1970s, are classic…… [Read More]
In the period between 2002 and 2012, Australia experienced a mining boom; a period in which the level of exports increased more than threefold and also the investment made in mining as a percentage of the nation’s GDP increasing from 2 percent to 8 percent. Imperatively, during the mining boom period, there was a significant increase in demand for minerals. This is because of the demand for minerals not only locally but also internationally. Therefore, this caused a rightward shift in the demand curve. This leads to the positioning of a new equilibrium price. The comparative theory best explains the exportation of minerals by Australia and the importation of other commodities from other nations. In this regard, Australia is considered to have a comparative advantage in the production of minerals because it can produce minerals at a relatively lower opportunity cost compared to China. Another aspect that was influenced…… [Read More]
Firm, Labor Markets, and Imperfect Information
Perfect Competition and Monopolistic Competition
A perfectly competitive market does not have barriers to entry or exit and is characterized by many producers and many consumers, all of whom are price takers -- a term that means the suppliers and the buyers cannot effect the price as they do not have market power ("Competitive Markets," 2014). Monopolistic competitive markets are do have some barriers to entry and exit. Consumers can find substitutes for all of the goods in a competitive market, whereas high product differentiation is seen in a monopolistic competitive market ("Competitive Markets," 2014). Indeed, one of the reasons that a firm can achieve a monopoly for a product is that the business has been successful in its efforts to differentiate a product, as perceived by its customers. The ability of a business to make profits in the long-run is referred to…… [Read More]
Balanced Federal Budgets
The federal government has a wide variety of responsibilities, most of which stem from programs that the government has created. Some of these outlays are discretionary, but many are not. The trade-offs for the federal government are usually not a question economics, but politics. The current federal budget for FY2016 shows a deficit of $474 billion. The largest outlays are for social security ($891 billion), other mandatory programs ($627), defense ($589), Medicare ($529) and non-defense discretionary, which covers a wide variety of different programs. Finding $474 billion to cut there -- or some of that money in conjunction with tax increases -- is inevitably going to be a challenge. Much of government spending in the budget is in the form of mandatory programs. Further, many of these are impossible, politically, to reduce. One does not simply cut Medicare payouts without losing a strong voting bloc, for example.…… [Read More]
There is a belief, common to economists, that government intervention is necessary to assist economic growth. The current belief that the reason that the economy is faltering is that job growth has faltered, has not altered this perception, even though it probably should have. Recently both the Bush and Obama administrations have tried many different means of stimulating the economy (much as Franklin Delano Roosevelt did during the "Great Depression"), and these means have had varying levels if success. However, despite some small amount of relief and a stronger stock market, job growth remains stagnant and the economy slugs along with it. The efforts of the current administration toward job growth and creation, whether that be in State of the Union speeches or actually policies, have not produced the desired effects. hy is this? Could it be that the Keynesian methods of economic growth and job production are faulty?…… [Read More]
Economics of New Ideas and Innovations
This research paper discusses the economics of a new idea. Without new ideas and inventions, the economy might very well become stagnant or decline, as predicted by many early economists, who did not understand that impact that ideas and innovative technology had on global markets.
Technology is endogenous in the new growth theory, which holds that technology is a function of the capital and labor used to develop technology, the technology used in that process, and the economic environment. For the purpose of this paper, technology refers to the methods and tools that are used to generate with new ideas and more efficient ways of producing goods and services.
Ideas and technical innovations are crucial to the economy. If a country wants to grow, it must create an environment that encourages entrepreneurs and innovators to generate new ideas. Creating an economic environment that promotes…… [Read More]
Economics: Neoclassical, Keynesian, And Marxian Theories
Social theories attempt to explain how people interact with each other, and with their surroundings. For this reason, it is believed that social theories shape society, so much so that people will theorize elements in their surroundings based on their life situations and what they experience in their interactions. Towards this end, what one person thinks or believes about a certain aspect may not necessarily be what another person thinks; people hold different theories about how the economy works, and how it influences human interactions - and this is particularly why we have multiple economic theories today. Social theories are broadly categorized into three -- humanism, structuralism, and dialectics. These three have been applied to economic theory to explain how the various elements of the economy interact to realize maximum outcomes. This text demonstrates how the aforementioned social theories have been used to shape…… [Read More]
Thus, a region or nation experiencing economic depression will be unable to use the interest rate lever to boost the economy. Similarly a country with high inflation will be unable to independently raise interest rates to contain inflation. Moreover, Islamic countries, which form a large part of the geography, do not believe in interest rates.
Political barriers -- Political differences between nations make it extremely difficult for them to adopt a common currency. It can lead to a loss in political sovereignty as monetary interests would need to surpass political interests. This is unlikely to be acceptable to most of the nations and the idea of a single currency may be difficult to implement (Gimp, 2008).
Will Pros and Cons change Over Time? Depending On the Country?
The economic conditions to determine a monetary union depend on: the openness and size of the economy involved to trade; the free movements…… [Read More]
Has the 2008 financial meltdown in the U.S. And the ongoing economic crisis in Europe have practically ended the era of economic globalization?
Following the financial crisis that marred the U.S. economy along with other global economies as well as the ongoing Eurozone debt crisis, there have been projected concerns that this predicament would end economic globalization. The purpose of this paper is to assess this claim. Going by Immanuel Wallenstein's World Systems Theory, the political economy of Third World economies and developed economies of the West are mutually dependent. Wallenstein's conjecture is that the growth and expansion of Third World economies relies on constant interaction with Western developed economies seeing as the world is characterized by a structural division of labor where the developing nations of the Third World provide cheap labor and raw materials while the developed economies are the holders of capital and controllers of…… [Read More]
The revelation of the financial crisis that unfolded in United States in 2008 is considered to be the worst economic crisis since the Great Depression, 1929. The distinctive causative factors that have contributed to the U.S. economic crisis 2008- 2009 are differentiated by aggravated financial control, higher risks in capital investment, the housing bubble phenomena in relation to the brisk credit expansion. The aggregation of these factors in the U.S. economy directed the economy towards the de- leverage and credit crunches as the bubble burst. The following paper shall be discussing about the degree of correlation between the tax implications policies with respect to the financial crisis in U.S.. The precise review of strong linkages between the taxation and economic crises is the explicit explanation of the crisis that shook America. The paper also highlights the key factors that demonstrated their abilities and rescued U.S. In the economic…… [Read More]
Economic Crisis Policies
US current economic crisis is considered to be started from real estate sector. The real sector started to decline in 2006 and it accelerated in 2007 and 2008. Housing prices have fallen from the peak from about 25% so far. The decline in prices left homeowners with no option and they were unable to refinance their mortgages and causes default of mortgages. This default of mortgages and loans swallowed the banks and financial markets such as falling of Lehman's brothers and other anks and blow to rest of economy happened as the whole economy was relying on banks and ultimately it slows down investment in the country and capital flows to other parts of the world like China and India. ank losses cause reduction of bank capital which in turn requires capital reduction thus saving bank from lending. It is estimated that every $100 loss and reduction…… [Read More]
Unlike the situation with retail consumer goods whose production costs can be readily amortized by reduction in cost-per-unit production, the theater does not produce tangible goods. Therefore, the marginal cost of entertaining each additional audience member is so small that it becomes negligible. By increasing ticket prices only a dollar or two, the theater could likely maintain most of its clientele and avoid reducing its appeal to new customers, thereby increasing profits. Diseconomies would not develop unless or until the theater decided to expand its facilities or to purchase additional movies based on the expectation that a full house could be maintained and then experienced insufficient additional patronage to offset those additional costs (McConnell, Brue, & Flynn, 2008).
Mankiw, N.G. (2008). Principles of Economics. Chula Vista, CA: South-Western
McConnell, C., Brue, S., and Flynn, S. (2008). Macroeconomics. New…… [Read More]
S. The societal system practiced in France serves as a model towards which the U.S. aspire.
President Barack Obama's healthcare reform plan is considered by many as being a socialist experiment that will significantly hurt the economy (CBS, 2009). In opposition, the President has stated that he does not intend to implement a healthcare system that depends on the government. Instead, he would prefer a system in which the government competes with private insurance companies for selling coverage.
The Invisible Hand Principle
The invisible hand principle was developed as an opposition to the protectionist system. This principle is actually a metaphor describing the self-regulating characteristic of the market. In other words, such a system can be implemented due to a combination of factors, like self-interest, competition, supply and demand. Adam Smith, who developed this theory, considered that the action of these forces and their effects are able to allocate resources…… [Read More]
John Keynes is one of the most influential economists largely due to his theory of Keynesian economics, which dealt with his modern macro-economic policies (Skorburg, 2009). His work is linked to the Great Depression, partly because he advocated public and governmental spending to base national economies on. His most celebrated piece of literature is General Theory.
Adam Smith is the quintessential Age of Enlightenment economist who published Wealth of Nations in 1776, which posited the viewpoint that free enterprise and laissez faire policies would benefit the free market system.
People wouldn't ordinarily link Karl Marx to a free market system since he advocated the exact opposite of that, a form of communism that results in socialism, but his Communist Manifesto -- which presaged the ussian evolution -- inspired many free market communists to oppose his ideas.
Friedrich Von Hayek's theories, which are included in oad to Serfdom, his…… [Read More]
These decisions necessarily entail that some potentially productive opportunities are sacrificed in order to make what is estimated as the most productive choice.
Supply and demand refer to specific products and services, the ability to provide these, and the level at which they are desired by the target market. uyers desire a product or services, and therefore demand a certain quantity of these at a certain price. The relationship between the price and quantity of desirability is the demand relationship. Supply is the actual quantity of the product or service that the market can provide. The concept of supply relationship is the correlation between supply and the price received by the supplier, who is willing to supply a certain amount of products at the price received.
The dynamic in the relationship between demand and supply has a direct influence on the efficient allocation of resources within an economy, as well…… [Read More]
Economics impacts on many areas of life subsequently it will impact on many areas of professional life. eflecting on the lessons learned, including the knowledge and skills gained, the real value is in the way that economics concepts can be applied to the real world; not only to explain event that are seen in the macro-environment, but to guide the way personal decisions will be made with that knowledge.
The first indicator of the lessons and concepts taught in the class being absorbed and developing into transferable knowledge has emerged with an increased understanding of the way that the economy operates and the influences which are present in the economy that are driving up prices.
There are many examples of the economic concepts; one example is the way that supply and demand has impacted on oil prices which has had a knock on effect in the economy as…… [Read More]
The nation will enforce law and order to protect its public property, regulate monetary frameworks and correct market failures. The government will be responsible for protecting private life of its citizens and property (Grant & Vidler, 2000).
Market and Competition Forces: the country's economy should be designed in such a way that it will promote competition. This is because competition means a fair deal in obtaining results. The government should increase sellers and buyers in the market because this would promote competition thus increasing the quality and efficiency. With competition, the country will be able to control and manage different functions of its economy (Grant & Vidler, 2000). Demand and supply are the prime market forces determining the production of a country produces and the suitable ways to do so.
Market equilibrium, price and output, are determined by market forces. Therefore, I would recommend that any least developed nation to…… [Read More]
There are several factors that could contribute to increased demand for owner-occupied housing in the United Kingdom. Given that this demand is presently suppressed by a poor economy, most of the conditions under which demand would increase involve finding ways to boost overall economic performance. One normal policy prescription, lowering interest rates, is effectively off the table with the current rate at 0.5% and the Bank of England expected to maintain this rock bottom rate for the foreseeable future (Oxlade, 2013). Banks could lower lending rates to buyers, but these rates are usually based on spreads relative to the rate at which banks borrow, so there might not be much flexibility for banks to lower rates profitably.
One way would be to boost the economy through fiscal stimulus, government putting money into the economy instead of taking it out. This would create better demand conditions, and would also give…… [Read More]
Presently the government manipulates the books around in order to compensate for any tax cuts that they give. In reality, the vital thing for the government to do is to discontinue spending money. While this is not always reasonable, it is essential to make sure that the people and corporations of the nation can flourish. Tax cuts, when put into practice for long-term consequences, will offer a momentous increase in the market (How Do Tax Cuts Help the Economy, n.d.).
Due to the model of fairness, cutting taxes is by no means an easy task. There are two distinct notions that are at play. These are horizontal equity and vertical equity. Horizontal equity is the scheme that all people should be taxed uniformly. An instance of horizontal equity is the sales tax, where the quantity paid is a proportion of the object being bought. The tax rate remains the…… [Read More]
hen I understand what drives people to buy bottled water, I will be in a better position to forecast demand. I expect disposable income, distribution saturation, cleanliness and taste of tap water and price of bottled water will all factor. ith this information, I could understand the price elasticity of demand, for example, or the elasticity of demand relating to any other variable. Going international I would focus on the same, but I would also understand the currency exchange dynamics and the image that my country or region has overseas. In general, however, the types of information I need would be mainly the same, with respect to marketing. ith respect to culture (marketing message) or other such variables unrelated to the economics of the decision, there are undoubtedly some different forms of information that I would need.
Second student: I would want to know what the trends are for bottled…… [Read More]
One of the other key measures of our economy is the unemployment rate. This measure provides something of a counterpoint to a growing GDP. The unemployment rate increased in October 2008 to 6.5%. The ability to find meaningful work is a key component of GPI, yet the GDP can grow even if unemployment is high. One of the reasons is that the GDP does not measure wealth distribution. The wealth gap has increased over the past eight years. Average household wealth has increased, but the rate of increase is faster in the top quartile of households. Real wealth in the lower quartiles has stagnated. Again, the GDP would measure the wealth as having grown nationally. But over the past eight years wealth distribution has worsened. hile this clearly constitutes economic success for some individuals, it does not constitute economic success for the majority.
The current account deficit has continued to…… [Read More]
A price discrimination strategy is one where different customers are charged different amounts. The price charged for my shop's submarine sandwiches will therefore be different for locals than for visitors. There are a number of ways to achieve this. In the context of a sandwich shop, the prices are going to be listed publicly on the menu, so it is impossible to openly discriminate with respect to prices. One technique that can be utilized to lower the average cost for each sub-for locals is to offer a loyalty card. The local would then receive either a discount or a free sub-after making enough purchases. This would deliver a lower price to locals in the long run. Alternately, a loyalty club can allow the locals to receive discounts if they are members of the club. A certain amount of annual sales would be required for club membership, or even a…… [Read More]
Economic Value Added (EVA) Accounting Practice
Although Economic Value Added (EVA) is not a new concept in economics and financial theory and is based on the 19th century concept of "economic profit," it has only been widely adopted recently by business firms as an accounting practice. In this paper we shall describe what EVA is, and look at its pros and cons from the point-of-view of the company adopting the practice and the investors. We shall also discuss how EVA differs from some other emerging accounting practices and the major issues relating to EVA as compared to other commonly used accounting principles. Finally, the possible problems and opportunities that a company adopting EVA principles can face shall be examined.
What is Economic Value Added (EVA)?
Economic Value Added (EVA) is the after-tax cash flow generated by a business minus the cost of the capital it has invested to generate that…… [Read More]
That is, international financial organizations, such as the World Bank and the International Monetary Fund and which controlled by core states, decide that, in order to grant financial aid to undeveloped countries, these states should comply with some rules that are, in the end, in the detriment of their own economy. For example, Africa pays more to the IMF and World Bank, than it collects in credit from them, and this leads to low living standards, poor education and health systems and undeveloped infrastructure.
Besides financial institutions, transnational corporations have a saying in the economic development of a country. Although one might be tempted to say that a corporation, by creating a branch in an undeveloped country gives that economy a boom, it is actually all about personal gain.
Working in a corporation might be considered the best thing that could happen to a person, on a professional scale. You…… [Read More]
Sorkin's book does a good job of giving the details on what happened among Lehman Brothers, Barclays, JP Morgan, Goldman Sachs, the Fed, and Big Gov following the collapse. Essentially, everyone had egg on his face -- but some of the bigger powers had the muscle to save face -- and sink competitors at the same time: which is exactly what Goldman Sachs did to Lehman. Goldman had been placing its cronies in the hite House for years -- and it would now go through the hite House to see who got bailed out and who did not. AIG got one -- because it owed a large chunk to Goldman (who had figured out the game ahead of time and started betting against itself by buying insurance through AIG). Sorkin's work is a work full of the kind of details that other writer's like Taibbi and Lewis do not take…… [Read More]
Observing the Influences that Impact Market Equilibrium
Purchasing fresh produce in a farmers market offers an opportunity to buy direct from a supplier. The process of buying fruit and salad items direct from the suppliers, rather than though an intermediary such as a supermarket, increases the exposure of the purchaser to price fluctuations. Visiting the market, which is held every weekend, over a number of weeks it was possible to see how different influences would impact on the supply and demand for the products, and how this impacted on the prices. The prices of the little gem lettuces appears to be one of the more sensitive products; this may have been due to their short shelf life. These lettuces, unlike other produce, are not suitable to be held for any period in cold storage, so there is not the ability to hold a supply ready for the peak demand.…… [Read More]
ealth does not equate to happiness, a sense of purpose, dignity or respect. One of the key underlying assumptions of neoliberal philosophy, as derived from Milton Friedman, is that financial wealth is the ideal end goal of all activity. hile financial wealth solves many problems it does not solve all problems. Opponents of globalization, whatever their other arguments, incorporate this understanding into their protestations.
Naomi Klein goes further, suggesting that the unequal wealth distribution in the globalized economy is deliberate. The march towards globalization is not an altruistic endeavor borne of a firm belief in the power of the free market, but is a calculated strategy on the part of the world's elite to seize the world's wealth and power at whatever expense is necessary. Indeed, any economic benefits realized by the masses are incidental. Casualties -- be they citizens of Iraq, indigenous peoples or indeed any of the world's…… [Read More]
The downward spiral of deflation, the collapse of countless banks and other financial institutions, and the unprecedented levels of unemployment all demanded that something be done.
The programs that constituted President Franklin Delano Roosevelt's New Deal were not entirely unknown in the pre-Depression world. Various European countries already possessed social welfare schemes to some extent, but in the United States this was largely new thinking. The changes wrought by the New Deal reflected as much the uniqueness of conditions during the Great Depression as they did the undercurrent of new attitudes and ideas that had gradually been taking hold among America's intellectuals.
FDR's planners acted in the context of changing values, an evolving set of institutions, shifting political and economic circumstances, and the ebb and flow of planning opportunities to create a distinctly national, American form of planning.... They were part of a wide-ranging national debate over how to create…… [Read More]
Governments influence the economy in many ways, but the two most often discussed in economics are fiscal policy and monetary policy (another might a trade policy, for example). Fiscal policy reflects the use of government spending and taxation to influence the economy (eil, 2008). Thus, the level of spending, the amount of revenue collected, and how the money is spent are all things that must be taken into consideration in fiscal policy. Fiscal policy also frequently has an effect on the decisions that businesses and individuals make. Consider the debate about taxes and the "Buffet Rule" -- the tax polices we have now are designed to encourage specific behaviors. This is why capital gains are taxed at a different rate than dividends, and why dividends are taxed at a different rate than interest income. So fiscal policy does affect the way some people behave, as they attempt to maximize…… [Read More]
The wage subsidy idea - combined with training and technical placement - could work well, even though it may be seen as a "government hand-out" to some. To those who cannot find work, public employment, if handled well, increases the labor supply ("net job growth") and reduces the amount of money paid out in unemployment benefits.
The answer to the question of how to increase the labor supply is perhaps simpler than increasing the demand: to wit, by increasing the number of immigrants one also increases the labor supply; the downside to that is that wages for native-born workers tend to decrease. A second way to increase the labor supply is to raise the age of retirement for workers, and/or raise the age at which pensions for older workers kick in. In either case, more workers remain in the market.
hy do our political leaders favor exports of U.S. goods…… [Read More]
The study includes an analysis of market structures. The paper discusses the market type which Amazon operates in and the effects on their business of the market structure. Amazon is operating in an oligopoly market structure which is discussed in the study.
The role that the market plays in an economy is a crucial aspect of how businesses make their strategies and perform. There are different kinds of market structures; there are competitive markets, oligopolies and monopolies. In a competitive market the market has many sellers and buyers who are trading the same products which make the each seller and buyer a price taker. In such competitive markets each seller and buyer has to accept the predetermined price of the good. The cost is determined by the willingness of the buyers to pay for a product and the seller to sell the product. Another significant characteristic of a competitive…… [Read More]
The process would take centuries, but by Elizabethan times it had surely begun. Serfdom had all but disappeared from England, and money rents and wages had largely replaced other forms of compensation and exchange. The new importance of trade contributed to a profound change in attitudes, one that was beginning to re-shape society itself. In 1579, Thomas Churchyard defined as nobles, "Merchauntes that sail forrain countreys," a statement that underscores the importance of generating wealth.
Though not legally noble, these individuals were already beginning to emerge as substantial players in English society.
Economic Expansion: The Manor as Productive Estate
The vast expansion of trade and commerce in Early Modern England found its fullest expression in the thirst for new outlets for national enterprise. England's growing collection of colonies represented an attempt to compete economically on a world stage. Rivalry with other European powers encouraged the discovery and settlement of the…… [Read More]