Categories
economics

Supplements Market

The supplements market is significantly large and we would need all organic foods collectively to measure up. When more employees are hired to work in the dietary supplement industry the pro is induced impacts. More careers directly related to the industry means more earnings and splurging as more jobs are founded.
The employment multiplier is the number that is multiplied by the number of jobs directly involved in the industry to measure the impact the industry will have on a region when it’s successful or failing (Kashian, 2012). In a 2012 report, Dr. Russell Kashian defined induced effect as the result of the family adjusting how they spend as a unit based on a bonus of more pay produced by direct and indirect effects.
The induced effect measures the effects of the changes in household income: employees and suppliers in the dietary supplement industry spend money at restaurants, grocery stores, and shops (Kashian, 2012). Consumption analysis refers to why and how people use products in addition to why and how they buy (Blackwell, Miniard, and Engel (2006). Supply is defined as the quantity of a good the business is willing to sell at an agreed price in the business (Manwik, 2009).

The market for dietary supplements continues to grow significantly. Today’s Dietitian magazine states some of the main reasons for the increase of consumers searching for the perfect dietary supplement product that includes the desire for a longer healthier lifestyle, more energy, weight control, and improved immunity (Palmer, 2010). Branding and positioning are a couple more factors that have influenced the demand and decision to buy specific reputable brand name dietary supplements. Demand is the quantity of goods and services consumers are willing and able to purchase regardless of price (Mankiw, 2009).
Senior citizens struggle with sustaining the best possible health as they would like. It is estimated that nearly 25 percent of the people over age 65 will be living with diabetes, almost one half will have arthritis, and more than one third will be considered obese by the year 2030 (Tindal, 2017). The market for dietary supplements is competitive buyers and sellers. The actions of buyers and sellers will determine the equilibrium.
Changes in Supply and Demand Affect Equilibrium Price
What’s the economic outcome or explanation for this? An IMPLAN input-output model is an instrument for measuring the dietary supplement industry’s economic influence of expenditures (Kashian, 2012). The direct effect is production adjustments coupled with an adjustment in demand for the good (Kashian, 2012). It is the first force on the economy and the spending is developed by the dietary supplement industry.
The University of Wisconsin Whitewater Fiscal and Economic Research Center reported that in 2006, the dietary supplement industry could disclose a national $22.5 billion direct-effected output or productivity. An indirect effect is derived from the fluctuating input needs of directly affected industries. They also found that indirectly, the industry contributed $16 billion while generating $22 billion (Kashian, 2012). Global dietary supplements market size was $126.14 billion in 2016 (Reports and Data, 2018).
In the meantime, the global organic food and beverage market was $110 billion in 2016, fairly close but not nearly as much as the dietary supplements market. Another economic contribution from the dietary supplement industry would be paid taxes. Multiple sectors of the industry paid $10.073 billion in taxes together in 2009, including $4.7 billion to the local government and $5.3 billion to the federal government (Kashian, 2012).
Consumers may even share the expense of taxes with the supplements market without knowing it. The costs can usually be tacked on to the cost of supply price. Tax on the dietary supplements and the factor of production becomes increased costs of production for the dietary supplements market.

Categories
economics

Questions: Economics

One: (10 points)
Tom leases a farmer’s field and grows pineapples. Tom hires students to pick and pack the pineapples. The following table sets out Tom’s total product schedule. Labor (students) Total Products (pineapples/per day) 2 220 3 4 5 6 420 7

Calculate the marginal product of the third student;
Calculate the average product of three students;
Over what numbers of students does marginal product increase?
When marginal product increases, compare average product and marginal product.

Two: (10 points)
Tulip growing is a perfectly competitive industry, and all tulip growers have the same cost curves. The market price of tulip is $15 a bunch, and each grower maximizes profit by producing 1 ,500 bunches a week. The average total cost of producing tulips is $21 a bunch, and the minimum average total cost is $18 a bunch.

How does the number of tulip growers change in the long-run?
What is the price in the long run?
What is a tulip grower’s economic profit in the long-run?

Three: (10 points)

What is market share test?
What is tie-in sales?
What is horizontal merger?
What is antitrust law?

Four: (10 points)
The following table shows the total revenue of the 50 firms in the tattoo industry Name of firms Total revenue (dollars) Bright Sports 450 Freckles 325 Love Galore 250 Native Birds Next 16 firms (each) 50 Next 30 firms (each) 20 Total Revenue 2625

Calculate the four-firm concentration ratio;
How would you answer to part 1 change if the 50 firms in the tattoo industry in different cities spread across the nation?

Five: (10 points)
The following table depicts the output of a firm that manufactures computer printers. The printers sell for $100 each Labor Input (Workers Per Week)
Total Physical Output (printers per week) 10 200 11 218 12 14 260 15 270 16 278

Calculate the marginal physical product and marginal revenue product at each hires 15 workers?
The weekly wage paid by computer printer manufacturers in the perfectly competitive market is $1 ,200. How many workers will the profit maximizing employer hire?
Suppose that there is an increase in the demand for personal computer system. Explain the likely effects on marginal revenue product, marginal factor cost, and the number of worker hired by the firm.

Six: (10 points)
Country Poorest 40% Next Richest Bolivia 13 21 26 Chile 1 Uruguay

Draw a Lorenz Curve for Bolivia
Draw a Lorenz Curve for Chile
Draw a Lorenz Curve for Uruguay

Seven: (10 point)

Information product
Interactive marketing
Search good
Direct sale

Eight: (10 points)
Draw a graph for monopolistic competition, explaining why its quantity supplied is below the market equilibrium
Nine: (10 points)
Village, a small isolated town, has one doctor. For a 30-minute consultation, the doctor charges a rich person twice as much as a poor person.

Does the doctor practice price discrimination?
Does the doctor’s pricing system redistribute consumer surplus?
If so, explain how?
If the doctor decided to charge everyone the maximum price that he or she would be willing to pay, what would be the consumer surplus?
In part 4, is the market for medical service in Village efficient?

Ten: (10 points)
Bud and Wise are the only two producers of aniseed beer, a New Age product designed to displace root beer. Bud and Wise are trying to figure out how much this new beer to produce. They know that if they both limit production to 10,000 gallons a day each, they would make the maximum attainable Joint profit of $200,000 a day – $100,AAA day each.
They also know that if either of them produces 20,000 gallons a day while the other produces 10,000 a day, the one that produces 20,000 gallons will make an economic profit of $1 50,000 and the one that sticks with 10,000 gallons will incur an economic loss of $50,000. They also each know that if they both increase production to 20,000 gallons a day, they will both earn zero economic profit.

Construct a payoff matrix for the game that Bud and Wise must play;
Find the Nash equilibrium;
What is the equilibrium if the game is played repeatedly?
If they cooperate, what will happen to them legally?

Categories
economics

Arab Common Market

Arab common market: The possibility of realization, Part 1 Regional, Analysis, 5/10/1999The starting point of an Arab market ought to proceed from launching and expanding programs of structural reform inside each Arab state in a way that makes available all the conditions needed for such programs to be accomplished with high efficiency, brings about real changes in the nature of the relationship between public authorities and economy, and defines the role of the state generally so that care can be accorded in particular to liberalizing the exchange rate, the interest rate, pricing of commodities and services, openness in trade through decreasing customs and administrative barriers to imports and exports, and at the same time cutting down subsidies and consumption, rationalizing government spending and really reforming the monetary and taxation systems. In agriculture it was found out that it is highly significant to see misconduct abandoned, which is the result of the state’s intervention in the agricultural production relations, that the state’s role should be confined to improving legislation pertaining to the agricultural sector to suit the economic changes affecting the other sectors, developing agricultural resources through programs of land reclamation and building dams, giving up the policy of intervening in determining the prices of agricultural products and recognizing the freedom of market mechanism to strike balance in the economy.In terms of privatization, the state organizations of this sector can be on the market, buying or selling to achieve a stable income for the farmers and reduce the differences in price fluctuation affecting crops, which goes in line with the nature of agricultural activity, characterized by a distance from the centralized economy, considering certain characteristics of this sector such as private ownership, numerous production farms and their geographical distribution. The next step should be liberalizing exchange with the external world. This policy must be built on realizing the power of competition within the framework of freedom of external exchanges.
The process of liberalizing trade should not end at a certain category of commodities, it should be expanded to cover all exchanges related to commodities or otherwise. However, the aforesaid two steps pave the way for the conclusion of bilateral or multilateral agreements.Studies show that trade exchange between countries that are parties to bilateral and multilateral economic agreements recorded a more remarkable increase than the previous periods. Thus trade agreements between Arab states play a positive role in promoting inter-Arab trade, notwithstanding the fact that there are cases when such agreements have a small or limited effect. These accords are a strong support for the efforts exerted in the direction of achieving Arab economic cooperation and integration. Trade accords are a bridge for inter-Arab economy cooperation, which is required as a preliminary stage for a common Arab market. They are, moreover, more dynamic, in this stage more than any other measure for liberalizing Arab trade and for surmounting, or easing, certain impediments of a political nature.
Afterwards, there might be an inclination towards the formation of regional Arab economic blocs such as the Gulf Cooperation Council and the Arab Maghreb Union. These blocs might be the nucleus of the aspired Arab common market. The blocs might be four, for instance, instead of two: the first groups the states of the Arabian peninsula, the second to group the states of greater Syria and Mesopotamia that have one common civilization throughout the ages, the third to link together the states of the Nile Valley which could include beside Egypt and Sudan, the states of Eritrea, Somalia and Libya, and the fourth bloc would have the states of the Arab Maghreb Union (Tunisia, Algeria, Morocco, Mauritania and the Libya).This distribution can be justified by the similitude’s existing among the states of each group such as the patters of consumption; the natural and climatic circumstances; the nature of agricultural, industrial and services production; and the similar standards of development of the infrastructures. The geographic location is also a basic factor in the distribution of inter-Arab trade. The dealings in Saudi Arabia’s imports are with the Gulf states, Syria, Lebanon, Jordan, Somalia, Sudan, Egypt and Yemen amount to 92% of its imports. Egypt imports from Sudan the equivalent of 62.

2% of its imports. Algeria imports more than 55% of what it needs from Tunisia and Morocco.Jordan’s imports come mainly from Syria, Iraq, Lebanon, and Egypt, which combined give more than 84% of its agricultural imports. Tunisia’s imports are centered in Morocco, Libya, Egypt and Sudan, from which the country gets about 62% of its overall agricultural imports. Sudan gets 79% of its imports from Saudi Arabia and Egypt. On the same level, exports from Syria, Jordan, Saudi Arabia, the Gulf states and Lebanon constitute 89% of their respective exports. Jordan’s exports go mainly to Saudi Arabia, the Gulf states, Syria, Iraq and Lebanon in the equivalent of 96% of its overall agricultural exports to Saudi Arabia, Egypt and Yemen.
For Egypt, the markets in Saudi Arabia, Sudan and Libya take around 60% of its exports.Tunisia exports 51% of its agricultural products to each of Algeria, Morocco, Libya and Sudan, and if its exports to Syria are added then this percentage jumps to 74%. Morocco’s exports to Algeria, Libya, Tunisia and Egypt combined amount to 46%, and if Morocco’s exports of fertilizers to Saudi Arabia are added, the percentage goes up to 83% of its total exports. Algeria’s exports to Arab states are almost nil, hardly reaching 2% of its overall inter-Arab agricultural exports, concentrating on the markets of Morocco, Tunisia and Mauritania. Previous Stories: Cairo hosts Arab electricity ministers meeting   (4/22/1999)   Arab finance ministers meet in Doha on Arab free trade zone   (4/21/1999)   Arab trade and industry chambers union meets in Lebanon   (4/9/1999)

Categories
economics

Black Market

The black market was a response to rationing that was introduced during World War Two. While illegal, the black market became a driving force in the Home front especially in the cities – for those who could afford the prices. The activities of German U-boats in the Atlantic greatly restricted the amount of food that came into the country. Therefore the government had to introduce rationing so that everyone got a fair share – primarily of food.
However, this led to a gap in the rake, which was filled by those involved in black market activities. While cigarettes and alcohol were never rationed they were in short supply. Both these commodities were invariably acquired via the black market. The Ministry of Food investigated complaints against those suspected of being involved in the black market and the penalties for those caught could be severe – a fine of IEEE and a possible two years in prison.
People most associated with the black market were commonly known as ‘spies’. This was thought at the time to be VISP’ back-to-front. Introduction A black market or underground economy is the market in which illegal goods are traded. Due to the nature of the goods traded, the market itself is forced to operate outside the formal economy, supported by the established state power. The segment of a country’s economic activity that is derived from sources that fall outside of the country’s rules and regulations regarding commerce.

The activities can be either legal or illegal depending on what goods and/or services are involved. For instance, a construction worker who is paid under the table will neither have taxes Ethel, nor will the employer pay taxes on the earnings. The construction work is legal; it is the nonpayment of taxes that classifies the event as part of the black economy. The illegal-weapons trade is an example of black-economy activity that is illegal. Black markets are those goods and services that form the black (or underground) economy.
Typically, black markets arise when a government restricts economic activity for particular goods and services, either by making the transaction illegal or by taxing the item so much that it becomes cost-prohibitive. A black market ay arise to make illegal goods and services available or to make expensive items available for less money Worldwide, the underground economy is estimated to have provided 1. 8 billion Jobs. Background There is no single underground economy; there are many.
These underground economies are omnipresent, existing in market oriented as well as in centrally planned nations, be they developed or developing. Those engaged in underground activities circumvent, escape or are excluded from the institutional system of rules, rights, regulations and enforcement penalties that govern formal agents engaged in according to the particular institutional rules that they violate. Five specific underground economies can be identified: 1 . Criminal acts 2. The illegal economy 3. The unreported economy 4. The unrecorded economy 5.
The informal economy 1 The illegal economy The “illegal economy” consists of the income produced by those economic activities pursued in violation of legal statutes defining the scope of legitimate forms of commerce. Illegal economy participants engage in the production and distribution of prohibited goods and services, such as drug trafficking, arms trafficking, and prostitution. 2 The unreported economy The “unreported economy” consists of those economic activities that circumvent or evade the institutionally established fiscal rules as codified in the tax code.
A summary measure of the unreported economy is the amount of income that should be reported to the tax authority but is not so reported. A complementary measure of the unreported economy is the “tax gap”, namely the difference between the amount of tax revenues due the fiscal authority and the amount of tax revenue actually collected. 3 The unrecorded economy The “unrecorded economy” consists of those economic activities that circumvent the institutional rules that define the reporting requirements of government statistical agencies.
A summary measure of the unrecorded economy is the amount of unrecorded income, namely the amount of income that should (under existing rules and conventions) be recorded in national accounting systems 4 The informal economy The “informal economy” comprises those economic activities that circumvent the costs and are excluded from the benefits and rights incorporated in the laws and administrative rules covering property relationships, commercial licensing, labor entrants, torts, financial credit and social security systems.
A summary measure of the informal economy is the income generated by economic agents that operate informally. The informal sector is defined as the part of an economy that is not taxed, monitored by any form of government, or included in any gross national product (GNP), unlike the formal economy. Pricing Goods acquired illegally take one of two price levels: * They may be cheaper than legal market prices. The supplier does not have to pay for production costs or taxes. This is usually the case in the underground economy.
Criminals steal goods and sell them below the legal market price, but there is no receipt, guarantee, and so forth. * They may be more expensive than legal market prices. The product is difficult to acquire or produce, dangerous to handle or not easily available legally, if at all. If goods are illegal, such as some drugs, their prices can be vastly inflated over the costs of production. Black markets can form part of border trade near the borders of neighboring Jurisdictions with little or no border control if there are substantially different tax rates, or where goods are legal on one his include alcohol and tobacco.
However, not all border trade is illegal. Consumer issues Even when the underground market offers lower prices, consumers still have an incentive to buy on the legal market when possible, because: * They may prefer legal suppliers, as they are easier to contact and can be held accountable for faults; * In some Jurisdictions, customers may be charged with a criminal offense if they knowingly participate in the black economy, even as a consumer; * They may feel in danger of being hurt while making the deal; * They may have a moral dislike of black marketing;
Traded goods and services of black economy. Some examples of underground economic activities include: Illegal drugs From the late 19th and early 20th centuries, many countries began to ban the keeping or using of some recreational drugs, such as the United States’ war on drugs. Many people nonetheless continue to use illegal drugs, and a black market exists to supply them. Despite law enforcement efforts to intercept them, demand remains high, providing a large profit motive for organized criminal groups to keep drugs supplied.
The United Nations has reported that the retail market value of illegal rugs is $321. 6 billion SUDS. Although law enforcement agencies intercept a fraction of the illegal drugs, and incarcerate hundreds of thousands of wholesale and retail sellers, the very stable demand for such drugs and the high profit margins encourages new distributors to enter the market without an increase in the retail price. 2 Prostitution Prostitution is illegal or highly regulated in most countries across the world.
These places form a classic study of the underground economy, because of consistent high demand from customers, relatively high pay, but labor intensive and low skilled work, which attracts a continual supply of workers. While prostitution exists in every country, studies show that it tends to flourish more in poorer countries and in areas with large numbers of unattached men, such as around military bases. Prostitutes in the black market generally operate with some degree of secrecy, sometimes negotiating prices and activities through codeword’s and subtle gestures, to prevent the rise of child prostitution. Weapons The legislatures of many countries forbid or restrict the personal ownership of weapons. These restrictions can range from small knives to firearms, either altogether or by classification (e. G. Caliber, automation, etc. ), and explosives. The black market supplies the demands for weaponry that can not be obtained legally, or may only be obtained legally after obtaining permits and paying fees. This may be by smuggling the arms from countries where they were bought legally or stolen, or by stealing from arms manufacturers within the country itself, using insiders.
In cases where the underground economy is unable to smuggle firearms, they can also satisfy requests by gun smiting their own firearms. Those who may buy this way include tizzies interested in protecting their dwellings, families or businesses. 4 Illegally logged timber Illegally logged timber is a huge problem. According to Interpol, the illegal logging industry is worth almost as much as drug production industry, in some countries. [14] [15] 5 Animals and animal products In many developing countries, living animals are captured in the wild and sold as pets.
Wild animals are also hunted and killed for their meat, hide, organs, Organs and other animal parts are sold for use in traditional medicine. 6 Alcohol Alcohol is world widely smuggled and available in every country and city, some Mounties allow the usage of alcohol but the usage, import and export of alcohol is more than they have allowed so. 7 Tobacco It has been reported that smuggling one truckload of cigarettes from a low-tax US state too high-tax state can lead too profit of up to $2 million.
In Asian counties the smuggling and illegal selling of tobacco is a main concern. 8 Biological organs Biological organs and their black marketing is also a main concern now a day in various countries of the world the certain markets selling biological organs selling of human organs is a major issue. Transportation providers Where taxicabs, buses, and other transportation providers are strictly regulated or monopolized by government, a black market typically flourishes to provide transportation to poorly served or overpriced communities. 0 Copyrighted media Street vendors in countries where there is scant enforcement of copyright law, particularly in Asia and Latin America, often sell deeply discounted copies of films, music CDC, and computer software such as video games, sometimes even before the official release of the title. A determined counter fitter with a few hundred dollars can aka copies that are digitally identical to an original and suffer no loss in quality; innovations in consumer DVD and CD writers and the widespread availability of cracks on the Internet for most forms of copy protection technology make this cheap and easy to do.
This has proved very difficult for copyright holders to combat through the law courts, because the operations are distributed and widespread. Since digital information can be duplicated repeatedly with no loss of quality, and distributed electronically at little to no cost, the effective underground market value of media is ere, differentiating it from nearly all other forms of underground economic activity. The issue is compounded by widespread indifference to enforcing copyright law, both with governments and the public at large.
To steal a car is seen as a crime in most people’s eyes, but to obtain illicit copies of music or a game is not. Yet, the preceding comparison, although common, is not truly analogous. Automobile theft results in an item being removed from the owner with the ownership transferred to a second party. Media piracy is a crime of duplication, with no physical property being talent. 11 Currency Money itself is traded on the black market. This may happen for one or more of several reasons: * The government sets (“pegs”) the local currency at some arbitrary level to another currency that does not reflect its true market value. A * The government taxes exchanging the local currency with other currency. Currencies, either in one direction or both (e. G. Foreigners are taxed to buy local currency, or residents are taxed to buy foreign currency). * The currency is counterfeit. * The currency has been acquired illegally and needs to be laundered before the none can be used. A government may officially set the rate of exchange of its currency with that of other currencies, typically the US dollar. When it does, the peg often overvalues the local currency relative to what its market value would be if it were a floating currency.
Those in possession of the “harder” currency, for example expatriate workers, may be able to use the black market to buy the local currency at better exchange rates than they can get officially. 12 Fuel In the EX. It is not illegal for a person or business to buy fuel in one EX. State for their win use in another, but as with other goods the tax will generally be payable by the final customer at the physical place of making the purchase. Petrol tanks for cooking/ water heating are often smuggled in many parts of the world.
Size of the black markets Largest black markets I Estimated annual market value (Billion SUDS) I Totally;29 1 Counterfeit pharmaceutical drugs | 200 | Prostitution | 187 | Counterfeit electronics | 169 | Marijuana | 142 | Cocaine | 85 | Prescription drugs | 73 | Opium and heroin | 68 | Software piracy | 59 | Movie piracy | 58 | Gas and oil smuggling | 53 Cigarette smuggling 150 1 Organized crime People engaged in the black market usually run their business hidden under a front business that is legal.
Often, certain types of illegal products are traded against one another, depending on the geographical location. Consequences or Reason of Black market Black markets flourish in most countries during wartime. States that are engaged in total war or other large-scale, extended wars must necessarily impose restrictions on home use of critical resources that are needed for the war effort, such as food, develops to supply rationed goods at exorbitant prices. The rationing and price controls enforced in many countries during World War II encouraged widespread black market activity.
One source of black-market meat under wartime rationing was by farmers declaring fewer domestic animal births to the Ministry of Food than actually happened. Another in Britain was supplies from the USA, intended only for use in USA army bases on British land, but leaked into the local native British black market. During the Vietnam war, soldiers would spend Military Payment Certificates on maid service and sexual entertainment, thus supporting their partners and their implies.
If the Vietnamese civilian wanted something that was hard to get, he would buy it at double the price from one of the soldiers, who had a monthly ration card and thus had access to the military stores. The transactions ran through the on-base maids to the local populace. Although these activities were illegal, only flagrant or large-scale black-marketers were prosecuted by the military. Advantages and disadvantages of black economy Underground economy can bring a competitive power to economy; it increases the employment, and providing resource to official/formal economy.
Those are no much positive side of black market. On the other hand, some of the negative effects in economy are: 1. The growth of black market means shrinkage of formal economy and it causes tax losses. 2. It brings unfair competition. 3. It causes unreliable statistical data. When we think of the black market, we often imagine a dark alley filled with rusty garbage cans, rain puddles and a shadowy figure lurking in the corner. While this may be the setting for many illegal activities, black markets are alive and kicking in all corners of the world, sometimes in plain view.
And they are big business, accounting for a significant portion of the world’s economic activity. Pakistan is the 31st among the black market hierarchy out of 91 countries Pakistan on Thursday was ranked 31st among 91 countries with an estimated black market net worth of $ban. Pakistan was ranked 31st by Havoc scope and the figure was determined by combining the total value of 52 black market products and activities with the total value of the black market activity in 91 countries.
World crime statistics and values are gathered from law enforcement and security agencies, international organizations, industry lawyers and representatives, and news articles. Havoc scope website stated that Pakistanis black market’s estimated value is $6. Ban per year with cocaine price in Pakistan at $118. 7 per gram; heroin price $3. 0 per gram; price paid to human smugglers $22,000; and human traffickers’ price is $342. Similarly, book piracy in Pakistan is estimated at $mom; counterfeiting $mom; cigarette smuggling $mom; drug trafficking $4. Ban; and gas and oil smuggling is estimated at $mom.
Havoc scope further stated that heroin trafficking in Pakistan is racy stands at $mom Conclusion All told, black markets generate revenue in the trillions of dollars yearly, and measures to combat these illegal markets cost billions. And you don’t have to be in a dark alley to become a black market participant. Throughout the world, these goods and services are available on street corners, in parks and even in regular shops. It is big business, and while the goods and services may change from time to time, there will still be black markets as long as sellers and buyers can be matched.

Categories
economics

Economic Forecasting Paper

Economic Forecasting Paper Rebecca Sloop University Of Phoenix Principles of Macroeconomics ECO/372 Alexander Heil PhD November 23, 2012 Economic Forecasting Paper Two historical economic data where information can be found are Bureau of Economic Analysis, U. S. Department of Commerce and FRED, Economic Time-Series Database. The FRED database comprises the national economic and financial statistics as well as interest rates, consumer price indexes, employment and population and trade data. This database is a valuable source because this consents populaces to see how the country’s financial state is at.
The Bureau of Economic Analysis includes estimates concerning national, international, and regional economic activity. It also provides statistics decision influenced by the government officials, business people, households and individuals. The quantitative of each site is that they included tax list information and census return evidence. The Bureau of Economic Analysis and FRED database qualitative used are they both expound on the findings that are encompassed in the database. The area that was not comfortable to me was about the measureable and qualitative.
I did not fully comprehend what the real variance is and after reading the material it seem as if they both mean the same. This week focus does relate to my field because I work for a Medicare part D drug plan. Having an indication of how and what the historical records collect it gives me a better understanding of how they regulate the group of people who may qualify for Medicare assistance each year. References U. S. Department of Commerce. (2012). . Retrieved from Bureau of Economic Analysis: http://www. bea. gov/

Categories
economics

How Does an Increase Interest Rate Affect the Economy in the UK

1.0 Introduction “Interest rate is the price paid by a borrower to a lender, usually on the basis of X percent of the capital per annum” (Gilpin, 1970, p.134). The interest rates in the UK are always set by the Bank of England which is the Central Bank in the UK. The Central Bank also operates monetary policy to ensure stability. The interest rate as part of monetary policy, in order to keep the inflation low and keep the economic growth stable and high over a sustained period of time (INTO Foundation booklet, 2008). However, in current years, the interest rate is very low in the UK. As a result of the financial crisis which stocked in 2008 in the USA, the economic in the UK has also been affected deeply. The UK’s interest rate now is 0.5%, it falls to the lowest for half a century (Boulden, 2009).
This essay discusses how interest rates affect the UK’s economy. I will describe how interest rates work in the current economic situation. The interest rates contribute to the economic growth in the UK.
2.0 How does an increase interest rate affect the economy in UK? 2.1Encourage people saving money and reduce borrowing First, a increasing interest rate will increase people saving money and reduce household borrowing (INTO Foundation booklet, 2008, p. 11). Because when interest rates rise, borrowing money from a bank becomes more expensive. It means that interest payments on credit cards and loans are becoming more expensive. Thus people will shop less and save money. For example, if a family is going to buy a new house, they need to borrow money from the bank to pay for the house. They plan to pay back the money in 10 years. At the same time, they must also pay the interest charged by the bank. As the interest rates rise, they will need to pay more. So people will choose to save money and not buy the house. Moreover, some people already have loans to pay for, and therefore they need to pay more interest to the bank. Thus they will have less income to buy other consumer goods. So when the interest rates rise, it will reduce consumption.

2.2 Decrease firms to investment Similarly, if the interest rates rise, it would decrease firms to investment (INTO Foundation booklet, 2008, p. 11). For the same reason, when a company owner decides to expend their scale of the company, he needs a huge capital to invest. Most of them will choose to borrow money from a bank. When there is high interest rate, they will cancel borrowing money from the bank. So increasing interest rates will also lead to less investment.
2.3 Promoting the exchange rate and makes exports less An increase in interest rates is also promoting the exchange rate, and this makes exports less (INTO Foundation booklet, 2008, p. 11). The definition is, “An exchange rate is the rate at which one currency trades for another on the foreign exchange market” (Sloman, 2007, p. 441). The higher interest rate leads to hot money flows, because it encourages people to save money in the UK. For this reason, the exchange rates will rise. When the exchange rate rise, it causes exports to become more expensive and imports cheaper. On condition that the demand for exports and imports is elastic demand, ultimately the high exchange rate will help to reduce the Aggregate Demand and the inflation (Economics Essays, n.d.). During the past year the exchange rate has been very high in the UK. Some experts believe that the exchange rate in the UK is over estimated. Consequently, exports will become less and less.
2.4 Reduce the aggregate demand and inflation rate The next is increasing interest rates will also reduce the Aggregate Demand and inflation rate (INTO Foundation booklet, 2008, p. 11). The above three points have the deflationary effect on Aggregate Demand. That is because the Aggregate Demand includes consumption, investment, government spending and net exports (Sloman, 2007, p.238). Net exports means exports minus imports (INTO Foundation booklet, 2008, p.4). Therefore, when the consumption, investment and exports all fall, the Aggregate Demand will decrease too. Furthermore, when the interest rates rise the inflation rate will fall too. For example, Figure1 shows the interest rates and inflation rates from 1985 to 2003 in the UK (Begg, 2003, p. 177). In 1990, the inflation in UK was very high, so the Bank of England increased the interest rates. After that, the inflation falls. So the interest rates rise will help to reduce inflation rate.
2.5 The price and cost will fall The price and cost will fall (INTO Foundation booklet, 2008, p. 11). Because the interest rates rise, the investment and consumption decrease then the aggregate demand curve move to leftward. Table 1 shows when the aggregate demand decrease, the price level fall.
2.6 Increase in unemployment Finally, when the interest rates rise in the UK, it will increase unemployment rate. As the increase interest rates help to reduce the inflation rate, the low inflation will result in unemployment. For example, a firm wants to spend more on capital goods to extend their scale. So the firm owner needs money to invest. However, when the interest rates rise, the firm will have to cancel the plan. Assuming the firm invests it and extend their company, there will be a new factory then it will provide more jobs for people. However, if the company cancel the plan, it will make a lot of people lose their job. Therefore, interest rates rise will cause unemployment rate to rise, too.
3.0Evaluation 3.1Control the economy growth stable Therefore the interest rates will have a good impact on the aggregate demand which help to get balance. The increased interest rates can also help to control the real estate market. Because when interest rates rise, it becomes more expensive when people want to borrow money from a bank to buy a house. Therefore, less people are going to buy a house. Then the price of houses in the real estate market will get stable, and it will not increase significantly. So this can help to keep the UK’s economy stable and healthy.
3.2Policy conflicts, unemployment However, “there will almost be policy conflicts. Lower inflation is likely to come about at the expense of lower short term growth and higher unemployment” (INTO Foundation booklet, 2008, p.11). For example, Figure 2 shows the inflation rate and unemployment rate from 1985 to 2003 in the UK (Sloman, 2007, p. 310). The figure 1 shows when the interest rates rise, the inflation rate fall. So in figure 2 which from 1991 to 1998, there was a lower inflation and a higher unemployment. From 1985 to 1988, there was a lower inflation and a higher unemployment, too. Therefore, when the interest rates rise to keep the inflation rate stable, it will make the unemployment rate increase. So there still has a policy conflicts here.
4.0 Conclusion To conclude, the interest rates can help with the government to keep the economy growth healthy. However, there are still some conflicts. When the interest rise, it will encourage people put money in the bank, then they can get the high interest. It will also decrease the investment and keep the real estate market grows stable. It will push up the exchange rate and help to reduce the high inflation rate. Then the unemployment will increase, too. Most of the affects which from a increasing interest rate can help government to control the economic growth in the UK. However, the unemployment is still a problem. So I think the government and the bank of England need to produce other methods to help with the interest rates and the unemployment problem.

Categories
economics

Economic interdependence essay

The computer age is upon us; with the advent of e-mail and lightning speed communications, the boundaries of the world have changed. We must now look at international policy from a global standpoint. As such, political scholars have had to change the way they analyze politics. The traditional views of liberalism and realism have altered drastically after the end of the Cold War and the events following the tragedy of September 11th. To this end, then, one must look at current definitions of liberalism and realism from a global standpoint rather than a solely domestic one.

The United States’ place in the world has been delineated for decades as that of international policeman; that is, seeking to emphasize global U. S. leadership through the instruments of military might and economic dominance. Whether this role has been accepted by those who have received the dubious benefits of United States’ assistance is yet to be determined. The difference in this function lies in the way liberals and realists approach it. In modern political theory, proponents such as Michael Doyle and Robert Keohane tout the ideals of liberalism (Mingst 9).

Liberals feel that states will enjoy increased cooperation as liberal values spread. Contemporary liberal political philosophy has three main branches, each of which examines the liberal policy from a different standpoint: economy, democracy, and cooperation. All of these liberal theories believe that international cooperation is a possible, even viable, goal. From the advocates of the economic standpoint, multinational economic cooperation is the key to peace.
For example, the countries of the EC have complete economic interdependence—from this perspective, this economic reliance will discourage these nations from warfare as it would threaten their comprehensive financial prosperity. The democratic advocates aver, along the Wilsonian model, that states that hold to democratic policies and ideals are inherently more peaceful than their authoritarian counterparts. Still other liberal scholars consider the efficacy of international cooperation through institutions such as the IEA and the IMF.
Regardless of the particular idiom they follow, most liberals’ inherent goal is that of global prosperity and communication through the twin tools of democracy and liberal ideals. Realists, on the other hand, suppose that economic and military power is the means to international dominance, ignoring the necessity for any type of cooperation whatsoever. Instead, realists affirm that all states will protect their own self-interests; because of this there will be a constant struggle for power and security among the global powers. You may also be interested in benefits of interdependence
Indeed, realists seem to view the world as a giant game of Risk in which the players are only waiting for enough military might before they invade their neighbors. Main proponents of realist theory are such scholars as Hans Morgenthau and Kenneth Waltz (Mingst 9). While liberals argue that realism no longer has a place in the world after the dissolution of the Soviet Union and the end of the Cold War, realists assert that all states will try to initiate their own power through ultimate dominance.
They disregard the role of international organizations and treaties; instead realists believe that even weak states will tend to counterbalance the power paradigms by siding with one power or another. Realists’ basic tenet is that human nature will never allow cooperation because humans are intrinsically competitive (Walt 2). Both approaches have their faults. Liberals tend to disregard the role of power in the international arena. Detractors of liberal theory propose that countries that already have power will want to maintain that supremacy at any cost.
Realists are conservatives in that they do not account for international change; indeed, most realists tend to view the world from a Cold War perspective and are merely biding their time waiting for the next great superpower to emerge and try to assert dominance (Mingst 10). For the United States today we stand alone and adrift in our economic, military, and political dominance. The end of the Cold War has left us somewhat disorganized because we no longer “face a grave international challenge to [our] security” (Lieber 3).
Some believe that the disappearance of the Soviet threat has led directly to an erosion of a cohesive executive power structure. The Clinton administration was a prime example of this—the American system of checks and balances saw a definitive upsurge as Congress fought Clinton on every foreign policy issue. For example, when the Croatian army launched a massive offensive in 1995 and forced thousands of Serbs to leave the Krajina region, the measure to send troops won by an extremely narrow margin, despite the support from NATO and President Chirac. In the Senate, Clinton’s decision to send 20,000 U.
S. troops won by only eight votes in the House of Representatives (Lieber 16). George W. Bush enjoys much greater support from Congress, yet the American people have begun to question his effectiveness as a world leader. In the beginning of his reign, he had the highest approval rating of any president since Franklin Delano Roosevelt. The fervent feelings of nationalism stirred up by 9/11 and the rapidity of his response gained him great favor among all sectors of the public. Lately, however, Bush’s ideals have begun to seem trite and the War in Iraq a personal vendetta.
The recent scandals among the Republicans in Congress have done little to alleviate the situation; as a matter of fact, the media has been predicting a sound defeat of the Republican Party in the next election. According to Tom Dickinson in Rolling Stone, Democrats could sweep both houses by winning only seven of the key races up for grabs this fall. As he puts it, “At issue is no longer whether the GOP will lose seats in November—it will” (Dickinson 59). If this prediction comes true, Bush will be looking at a Congress that will no longer unilaterally support him.
If we cannot depend on a unification of the executive and legislative powers, we can no longer depend on a coherent power structure in the world arena. Despite this, however, the United States is in a unique position to set the standard for future international politics. We have a choice—we can continue to treat our nation as a splendid, isolated island secure in our realist and unilateral policies—or we can understand that the tenets of liberalism are the only choice in a world that has become increasingly unified in all aspects: political, economic, and social.
Perhaps the best way to embrace this policy would be to put it to use in our relations with the Asian nations; to wit, China and North Korea. The Chinese policy toward the U. S. has traditionally been one of, Wei song, nei jin (Tkacic 3). This translates roughly to “soft on the outside, hard on the inside”. Both countries have traditionally blamed their woes on the United States, particularly after the nuclear debacle in 1993. The deployment talks in mid-1994 showed a bizarre mixture of liberal coercive diplomacy and realist conventional deterrence (Lieber 55).
These tactics worked because the U. S. had a strong military force and was more than prepared to use it—as North Korea had discovered to its detriment in the 50s. In this case, the U. S. , and in particular the Clinton administration seemed to follow a policy of selective engagement. North Korea, Iraq, and Iran are similar in that they are “politically ambitious countries that have demonstrated a certain insensitivity to risks and costs” (Lieber 108).
The Republican Party had traditionally been associated with strength in foreign policy issues, and Clinton’s difficulties with Haiti, Somalia, Bosnia, and particularly North Korea seemed to prove that a Democrat could not handle foreign relations effectively. The truth was this: merely the threat of U. S. military involvement seemed to be an effective deterrent to defuse the 1994 situation in North Korea. The historical alliance between the U. S. and North Korea-China has always been rocky.
Korea was at the center of all of the major wars in East Asia in the 20th century, yet has often been overlooked or underestimated by the world until it was too late (Hwang 2). From the Sino-Japanese War in 1894 to Korea and Viet Nam, Korea has served as a strategic touchstone for the other Asian nations. For example, some have argued that the United States entered Viet Nam as a direct reaction to its failure to stop Communism in Korea (Ibid. p. 3). South Korea has managed to become a great economic force—one of the “Asian tigers” so worrisome to the U.
S. for the past few decades. South Korea has the tenth-largest economy in the world and serves as a democratic model for other Asian nations. North Korea, on the other hand, has a failed industrial economy and is an active Communist nation under a troublesome and cruel dictator. The United States unwittingly became the catalyst for South Korea’s current powerful position; by intervening in Korea in June 1950 they guaranteed South Korea’s safety by protecting the nation from North Korean troops (Hwang 3). For years after that the alliance between the U.
S. and the Republic of Korea has been outstanding. This alliance has guaranteed economic prosperity and has gained us a valuable political ally, as well. The ROK contributed both money and troops to the Viet Nam war effort, and, more recently, contributed to Operation Desert Storm during the first Gulf War (Ibid. p. 4). After the Nixon doctrine in 1969, South Korea reacted by creating a military force and a strong domestic defense industry. Later, the formation of the Combined Forces Command (CFC) and the later redirection of U. S.
troops from South Korea to Iraq caused further tension. These actions led many in South Korea to believe that the United States was punishing the ROK for its criticism of its policy toward the Democratic People’s Republic of Korea (DPRK) (Hwang 5). The most profound difference in recent policy shifts must be addressed first. The U. S. continues to worry about the DPRK’s military and nuclear strength, while the Republic of Korea fears that a breakdown of the current regime would lead to a subsequent collapse of their own economy.
In sum, the United States’ attitude toward North Korea has been a consistent one of fear of military might, whereas South Korea’s has altered drastically. The ROK no longer worries about a military threat; instead they are concerned what might happen to their own stability and economic prosperity if the DPRK should fail. Until recently, China had been one of the DPRK’s strongest allies and protectors. According to John J. Tkacik, Jr. in his article, “China’s devout wish has been that North Korea might bluster about having the bomb—and allow the world to suspect that it had one—without actually testing one and removing all doubt.
North Korea could leverage that ambiguity for international aid, while China could act as an honest broker and still claim to be concerned about nuclear proliferation” (Tkacik 1). Unfortunately for U. S. foreign policy makers, the attitude of China and North Korea toward them has been one of blame. Beijing has constantly withheld any criticism of the DPRK and blamed the U. S. for all of North Korea’s financial and political troubles. After the Six-Party Talks, Ambassador Wang Yi told the press in 2003: “America’s policies toward North Korea, this is the main problem we are facing” (Tkacik 1).
The Bush Administration claimed in 2005 that it would respect North Korea’s right to light nuclear reactors. The Chinese continued to insist that the U. S. lift its economic sanctions on the DPRK, despite the fact that the country’s excessive illegal activities have put them on unsteady political ground with even their most stalwart allies. On October 5, 2006, North Korean leader Kim Jong Il stated that he would test a nuclear device. At this point even the Chinese refused to support them. This one act of defiance on North Korea’s part altered relations between China and the DPRK ineradicably.
Whether these interactions continue to be strained will only be determined in the future. The question remains, then, how will the United States respond to threats like this in the future? The current administration favors a policy of denial in efforts to keep its war effort in Iraq a viable one. Some of his opponents claim that Bush himself is a strict adherent to the realist school of thought. In the wake of September 11th, this hardliner stance was a welcome change from the noncommittal foreign policies of his predecessor. Now, conversely, it seems as if the American public has begun to embrace more liberal ideals.
It has also been touted that Bush’s so-called “softer” stance on North Korea may be a ploy to regain flagging support for the scandal-ridden GOP. This new attitude is certainly a marked change from that in 2003, when Bush labeled the nation the “Axis of Evil” and called their leader a “brutal dictator” (Sik 2). Prior to this, Bush’s chief goal in foreign policy had been to prevent Weapons of Mass Destruction (WMDs) from getting into the hands of “rogue nations” like North Korea. The final issue now becomes how to deal with North Korea, and nations like it, in the future.
It is quite clear that Bush’s hardliner CVID (Complete, Verifiable, Irreversible Dismantlement) principles no longer apply to North Korea. The country already sees the U. S. as the biggest barrier to its expansion and practicability as a nation—threats and military action will obviously only exacerbate the situation. It is heartening to see that China will no longer hide North Korea’s transgressions under its formidable aegis; however it is also possible that this current attitude could change in an instant if the U. S. does not modify its policies toward the DPRK.
The last century saw a mix of both types of policies, and the triumph and utter defeat of both. The end of the Cold War guaranteed a shift in the ideologies of American politics (Lieber 38). Liberals are now internationalists, while realists continue to pursue a policy of American self-interests. For example, the American public is generally opposed to military intervention, unless it has a genuine humanitarian effort to back it up. Historically, the United States had not gone to war readily—we entered both World Wars several years after they started.
In cases like Somalia or Rwanda, the American public started off in favor of U. S. intervention when presented with the atrocities they witnessed on their television screens. This type of righteous anger is difficult to maintain, however, and after only a few months the public favor for both conflicts fell dramatically (Lieber 49). The War on Communism pned the greater part of the 20th century. If one analyzes Korea, Viet Nam, and even the Cold War, one can see that these conflicts were constructs of an American government steeped wholeheartedly in the ideals of realism.
The United States was not concerned about the treatment of the individuals in Korea or Viet Nam; if they were, they would have found that many of the Vietnamese favored the Communist government, at least on a fundamental level. The rhetoric of failure pervaded all of these wars. We tried to argue that our involvement was part of an effort to sustain the greater good—that is, to defend the world of democratic ideals. The truth was that we wanted to prove definitively that our way of life was the only way. Despite the upheaval at home President Johnson continued to send troops to Viet Nam after authoritative proof that the U.
S. was losing the war on all fronts. There was no other explanation for this behavior other than that we did not want to lose face in the eyes of the international community. If we could not sustain a successful war against a poor, backward former colony like Viet Nam, how could we maintain one against the Soviet Union? The irony is that we entered into Viet Nam with noble intentions: we were trying to assist the French, our allies, in their fruitless efforts to sustain their failing leadership in the nation. In a more modern sense, the conflicts in Bosnia, Somalia, and Rwanda were liberal efforts to assist the U. N.
in maintaining humanitarian ideals throughout the globe. The Clinton administration could not gain support for these efforts from Congress, which showed that we had a liberal leader at the helm of a realist Congress. Today, the need for international cooperation is greater than ever. Global borders, once so vital, have eroded to the point that they are no longer visible to any but the most redoubtable warmongers. In an era where one can contact Bora Bora in an instant, the necessity of communication and understanding is greater than ever. It is true that human nature will not change; what we can change is the manner in which we deal with it.
Many people argue that the United Nations is an impotent organization whose time has passed. Others debate that the U. N. is the only forum in which the smaller nations of the world have a voice. Unfortunately, both views are correct. For instance, in the case of Bosnia, Serbian soldiers seized 350 UN peacekeepers as hostages. The United States was forced to intervene in August of 1995. By November of 1995 the nations of Bosnia, Serbia, and Croatia arranged to sit down and discuss the matter, and by the 21st of that month an agreement was signed (Mingst 121).
In this instance, then, the UN was powerless and had to look once more to the U. S. to provide international leadership. Realists quote this episode as the strongest example of their belief in the importance of military leadership. For the American public, too, military leadership is palatable, but only if the conflict is brief. Witness the revolutionary transformation toward Bush’s policies from the beginning of his administration to the present. More than 55% of Americans polled have stated that they will not vote for an incumbent in general and a Republican in particular (Dickinson 58).
The long war in Iraq has taken its inevitable toll and most of it on American public opinion. From the beginning of the last decade, the rubric for American intervention overseas has seemed to have been, “Win quickly or get out” (Lieber 17). The War on Terror has been going on too long for the comfort of the American mindset. In this manner, then, we have altered in the space of eight years from a nation of realists to a nation of liberals in our political attitudes. American attitudes regarding the UN have changed, as well.
Liberals will state that the UN has also had some unilateral successes, as well, particularly in their peacekeeping efforts. The UN played critical roles in ending the war between Iran and Iraq, the Soviet invasion of Afghanistan, and civil conflicts in Cambodia and Mozambique (Lieber 54). They also played a crucial part in ending the 1990-91 Gulf War against Iraq (Ibid. p. 55). Other international organizations have not fared quite so well. The World Bank, begun with such noble intentions, has become little more than a pawn which we can use to threaten smaller nations.
Ironically the U. S. is the biggest debtor in the world, whereas nations like Romania have no foreign debt whatsoever. On the other hand, the WHO, in conjunction with the CDC, has had great success in gaining funding for fighting diseases like AIDS. NATO, too, has been an organization whose time has come. Many of the burgeoning Eastern European nations are clamoring to become a part of NATO in an effort to improve their diplomatic relations in the eyes of the Western world. Other organizations, such as the ICC, or International Criminal Court, are of more recent origin.
While it is not a new idea to punish nations in retaliation for war crimes, using an international forum in which to do so is an idea founded after the conflicts in Yugoslavia and Rwanda. The ICC covers a very specific group of crimes and seeks to penalize the individuals responsible. The dictates that the ICC covers are genocide, crimes against humanity, war crimes, and crimes of aggression. The ICC should help to avoid extradition issues in that the ICC has absolute jurisdiction over these aspects of international law.
It will also serve as a sounding board for enforcing individual and national accountability (Mingst 190). In order to comprehend the effectiveness of international organizations, one must first analyze how liberals and realists view them. Realists are basically state-centered; that is, they believe that states only act to preserve their own self-interests. While they acknowledge that international law has a place in preserving order and the status quo, they also feel that states only comply with international laws because it serves their self-interests to do so (Mingst 191).
Order brings benefits; therefore states should comply with imposed order to reap these benefits. For example, it behooves states to follow the dictums of maritime law and not invade foreign waters. Conflicts can be costly on an economic, psychological, and military level; therefore, most states abide by international laws to avoid reaping these costs. As for international organizations such as the UN, realists are skeptical. They feel that most of these organizations have more weaknesses than strengths. They aver that the UN has proven unproductive and ineffective.
An example of this might be the failure of the UN to enforce the 2003 resolutions against Iraq. In this manner, they claim, international law will only stand to reinforce the powerful states, because the dominant states are the only ones with the means to bring such causes to fruition. The realist belief system is essentially anarchic—they believe that states only cooperate with one another because it is in their self-interests to do so. If they choose to disregard the strictures of international law, they will also do so, particularly if the law in question directly affects their economic or military wellbeing.
Realists believe that international organizations and NGOs are completely useless in that they have no means of enforcing their dictums. They cite as examples the failure of the UN during the civil war in Yugoslavia. After the fall of the Soviet Union in 1991, the nation of Yugoslavia had no effective arbiter, i. e. the U. S. S. R. , to mediate disputes. Yugoslavia had major fault lines within the country: religious, political, cultural, and historical (Mingst 204). The conflicts that resulted after Russia could no longer control the nation were so ferocious that the world was appalled.
Serbian leaders tried to maintain unity in the face of strong opposition from separatist movements from the Slovenian, Croatian, and Bosnia-Herzegovinian nations. Several countries jumped into the fray, supporting one cause or another, but this only served to make the situation worse and emphasized the ideals of Yugoslavia as a divided nation. Both the EU and the Conference on Security and Cooperation in Europe (CSCE) tried to start negotiations, but none could come to a successful conclusion.
Fighting broke out among the warring factions in the meantime. At this point, the UN got involved to try to deliver humanitarian aid and establish a peacekeeping force. In the end, no international arbiter was able to settle the conflict, and Yugoslavia ultimately ended in the division of the country into four separate nations: Croatia, Serbia, Bosnia-Herzegovina, and Slovenia. In this manner, then, realists assert that this was the ultimate failure of international organizations versus the self-interests of states.
The liberal view on international organizations is that human beings will ultimately follow the ideals of right. Therefore, they follow international law because it is morally just to do so. In the liberal mind, all states will benefit from doing what is right and moral, and international organizations represent the ultimate culmination of this goal of international cooperation. States have general expectations about other states’ behavior (Mingst 190). In a system of mutual cooperation and respect, liberals argue, the system of international law will succeed.
They do agree with the realists on one point: the system only works if powerful states become involved. A request for aid or a diplomatic protest from a small or weak nation will most likely be ignored unless the vulnerable nation has a powerful ally. On the plus side of this argument, this type of international hegemony is precisely why treaty organizations and international courts function so well—they keep the large powers in check while protecting the interests of the smaller states. Thus it befits all nations to cooperate on an international level.
For their part, liberals quote the success of such organizations as the ICC in upholding international standards and actively pursuing war criminals after Rwanda, East Timor, and Yugoslavia. They also state that the multinational peacekeeping efforts of the UN were instrumental in ending hundreds of international conflicts, including the First Gulf War. Liberals ultimately believe that international cooperation is not only a possibility, it is a probability. As far as North Korea is concerned, the best policy may have to be the liberal one.
It has become clear through earlier negotiations such as the Six-Party Talks that North Korea does not hold reasonable views about the United States’ role in the world. They have hidden behind China for years, but North Korea is not necessarily affiliated with the Chinese in any way except for acknowledging a Communist government. North Korea is the bastard stepchild of the East Asian nations; that is, it doesn’t fit into any particular category. It has little in common with its countrymen to the south, and even less in common with nations such as Japan, Thailand, and Taiwan.
It is a Communist nation in that it has a collectivized economic system, yet it also is a dictatorship. It has a standing army that was once enough of a threat to force United States’ intervention; yet the South Koreans have built enough of a military force to no longer fear invasion. In short, the DPRK is a country trying to find its identity and its place in a world that is constantly changing and melding these identities. Even China, its traditional ally, has refused to back the DPRK in this latest fiasco. Ambassador Wang was quoted as saying, “I think there needs to be some punitive actions” (Tkacik 1).
North Korean leaders defied China’s displeasure, even going so far as to claim that no one could protect them. “Only the strong can defend justice in the world today where jungle law prevails. Neither the U. N. nor anyone else can protect us” (Tkacik 1). The issue now remains: how do we approach this issue without offending either nation? The liberal approach seems to be the most logical. First, we need to comprehend the fundamental differences between ourselves and the Asian nations, while appreciating the role that China has played in hosting the Six-Party Talks (Asher 1).
We can be relatively confident that the Chinese and the North Koreans will ultimately seek a diplomatic solution to this dilemma. The fact that the Bush Administration is changing its previously harsh stance against the DPRK could lead to a beneficial end to this problem. The ultimate solution to the issue of North Korea seems to stem from Bunzi’s last statement. Sustainable prosperity is the only possible diplomatic resolution to the escalating problems with the DPRK, and indeed with any nation. If we stopped trying to coerce other nations to follow our lead and instead gave them the tools to do so themselves, we would all benefit.
Ultimately, the path to successful globalization lies in financial and political cooperation that would allow all nations to keep their own national and cultural identity while making them an integral part of the international whole. Sources Books Lieber, Robert J. : The Eagle Adrift: American Foreign Policy at the End of the Century. Glenview, Ill. Scott, Foresman, 1998. Mingst, Karen A. Essential Readings in World Politics. New York, NY. WW Norton & Company, 2004. Mingst, Karen A. Essentials of International Relations. New York, NY. WW Norton & Company, 2004. Articles Asher, David L.
, “How to Approach the China-North Korea Relationship”, October 10, 2006, Rpt. Delivered to the Heritage Org. Davidson, Tim, “Taking Back Congress”, Rolling Stone, October 19, 2006. Hwang, Balbina Y. “The U. S. -Korea Alliance on the Rocks: Shaken, Not Stirred”, October 16, 2006, Lecture delivered to the Heritage Organization. Sik, Cheong Wook, “Sudden Changes in Bush’s North Korea Policy”, August 7, 2006. Tkacik, John J. “A New Tack for China after North Korea’s Nuclear Test”, October 11, 2006, Article delivered to the Heritage Organization. Walt, Stephen M. “International Relations: One World, Many Theories”, Washington: Spring 1998, Iss.
110 Websites www. heritage. org www. libdems. org. uk/news/ www. simpol. org Annotated Bibliography Lieber, Robert J. : The Eagle Adrift: American Foreign Policy at the End of the Century. Glenview, Ill. Scott, Foresman, 1998. This book focuses on American foreign policy in the time frame after the Cold War. It highlights specific experiences of the United States and its evolving role in international relations. The book is devised into different parts the first part taking into consideration public opinion and debates over civilized intercession over foreign altercations.
Part two of the book deals with issues arising between different countries and the United States (focusing a lot on the Middle East and Russia). Part three divulges international economics as it relates to the United States and abroad as well as the role of the United States as a world power. Mingst, Karen A. Essential Readings in World Politics. New York, NY. WW Norton & Company, 2004. Mingst book draws attention to international relations in a myriad of ways both from involving different authors as well as different subject matters.
World politics, as well as international terrorism and the role of the United States in each of these areas is discussed from a pied example of viewpoints. The book offers a great deal of contrasting material in order for an objective reader to come to their own conclusion. Mingst, Karen A. Essentials of International Relations. New York, NY. WW Norton & Company, 2004. The theories involved in this book include Marxism as well as fundamentalism in view of how they relate to the United States foreign policy.
Liberalism and realism also take a fundamental position in the book involving political theory in an international perspective. In similarity of Mingst’s other book utilized in this paper, this book also reflects a wide range of viewpoints that are both countered and enhanced in other essays and research allowing for the reader to formulate their own hypothesis. www. heritage. org This website is a self-proclaimed think tank website that navigates viewers through both educational and researchable documents.
These documents contain material prevalent to the subject of the United States and international policy by promoting a conservative policy that delves into five fundamental principles: “free enterprise, limited government, and individual freedom, traditional American values, and a strong national defense” www. libdems. org. uk/news/ This website provides a searchable database that involves a democratic viewpoint of not only country issues but also world issues and actions. It gives up to date information, albeit a bit bias, it also gives accurate accounts of the United States in foreign policy.
www. simpol. org This website found its inception with British businessman John Bunzi. It gives technology advancements in the area of finding a suitable transition from today’s state of global affairs, said to be of a destructive nature, such acts of destruction are focused on within the context of the website and cited examples from different authors is also given. The website also delves into the growing competition on the global economic market and the increasingly powerful international businesses in light of politics as well as other international institutions.

Categories
economics

Understanding of Agency Theory and Firm Performance

The most common belief is that Agency Theory is based in the economic model of man (e. G. Brenna , 1994). Jensen and Neckline arguing that the theory is grounded in what they call REAM – the Resourceful, Evaluative, Maximizing Model (Jensen , 1994). They argue that the REAM most closely replicates human action and that the economic model of man is a simplified version that does not reflect the spectrum of human behavior. Lets see a table that compares the two of them with logical order. Comparison of Economic Model of Man and REAM
Economic Model of Man Rational Bounded Rational Maximized Maximized based on thorough evaluation Motivated by incentives Actions driven by Incentives Self-Interested Opportunistic with guile Opportunistic if beneficial Focus o Focus on extrinsic rewards Will substitute goods if beneficial (not driven exclusively by extrinsic rewards) Not other regarding Altruistic if beneficial Resourceful Resourceful – innovative when facing constraints and opportunities With the understanding that man is self-interested, ever opportunistic and driven by incentives, agency theory addresses the effect of having this man as manager in the modern corporation by providing prescriptions to taming him. Industrial organization economics providing a basic theoretical perspective on the influence of market structure on firm strategy and performance. There is a range of specific models, major determinants of firm-level profitability include: (1) characteristic of the industry in which the firm competes (2) the firm’s position relative to its competitors and (3) the quality or quantity of the firm’s resources. (1 )landlers variables A long tradition is concerned with identifying properties of industries intriguing to above-average profitability.
A large set of variables (growth, facilitation, capital and advertising intensity, etc. ) have performed differently in different studies, but the overall importance of these factors is beyond dispute (Reverberant, 1983). (2)Variables relating the firm to its competitors Originally perceived as the source Of market power market share and more specifically relative market share as viewed for this study serves as a proxy for some firm-specific relative competitive advantage resulting from learning effects and other firm specific assets. (3)Firm variables The typical economic model of firm performance explains from 15 to 40 percent of the variance in profit rates across firms.

Apart from random effects, measurement errors, and so forth, one can suggest at least three explanations for the ‘remaining’ variance. First, there may be important economic variables, the extent of which cannot be measured (e. G. Assets that are specific to an industry or a trading partner). Second, the ‘true’ model may be such that intervening economic variables differ from case to case, making aggregate analysis difficult. Third, with very few exceptions organizational factors are not considered in this literature. ORGANIZATIONAL MODEL OF FIRM PERFORMANCE Perhaps even more than their economist counterparts, organizational researchers have developed a wide variety of models of performance.
As an example managers can influence the behavior of their employees (and thus the performance of the organization) by taking into account factors such as the formal and informal structure, the planning, reward, control and information systems, their skills and personalities, and the relation of these to the environment. But on the other hand we have some questions about firm performance. Can a firm be over-differentiated in one area and under fractionated In another, but on the whole be just about right? In contrast, firm performance is an aggregate phenomenon. Numerous studies have demonstrated how changes in organizational structures, systems and practices have altered climate measures and hence individual performance .
Both organizational structure (p of control, size, levels) and organizational processes (performance reviews, budgeting, collaboration) were more closely associated with climate measures than with performance (both subjective and objective) measures, and that organizational climate was directly linked to performance. Other more clinical efforts have shown linkages between managerial practices and attributes or dimensions of organization climate and firm performance . Figure 1 illustrates the assumed causality Of the traditional climate model Of firm performance. This thesis has uncovered a number of interesting points, many of which are perceived to lend themselves to exam aspects for further research.
It would be interesting to obtain a more solid picture of our research and wows that research may provide an interesting basis for comparison with respect to the impact and consequences of Agency Theory and Firm performance within report governance mechanisms utilized today.

Categories
economics

Cardinal & Ordinal Approach in Economics

Cardinal utility analysis
Human wants are unlimited and they are of different strength. The means at the disposal of a man are not only scarce but they have alternative uses. As a result of scarcity of resources, the consumer cannot satisfy all his wants. He has to choose as to which want is to be satisfied first and which afterward if the resources permit. The consumer is confronted in making a choice. For example, a man’ is thirsty. He goes to the market and satisfies his thirst by purchasing coca’-cola instead of tea.
We are here to examine the economic forces which. Make him purchase a particular commodity. The answer is simple. The consumer buys a commodity because it gives him satisfaction. In technical term, a consumer purchases a commodity because it has utility” for him. We now examine the tools which are used in the analysis of. Consumer behavior.

Concept of utility
Jevons (1835-1882) was the first economist who introduced the concept of utility in economics. According to him ‘utility’ is the basis on which the demand of an individual for a commodity depends ‘Utility’ is defined as the power of a commodity or service to satisfy human want. Utility thus is the satisfaction which is derived by the consumer by consuming the goods. For example, cloth has a utility for us because we can wear it. Pen has a utility for a person who can write with it. The utility is subjective in nature. It differs from person to person. The utility of a bottle of wine is zero for a person who is non-drinker while it has a very high utility for a drinker.
Here it may be noted that the term ‘utility’ may not be confused with pleasure or awfulness which a commodity gives to an individual. Utility is a subjective satisfaction which consumer gets from .consuming any good or service. For example,Poison is injurious to health but it gives subjective satisfaction to a person who wishes to die. We can say that utility is value neutral.

Categories
economics

What to Expect from Maine’s Economy

There are many changes that need to be made to improve the state of Maine’s economy. Some of these changes can be immediate changes, some are short term, and some are long term changes that will occur over this four-year term. Some immediate changes are going to be around the education system, short term changes are going to be fixing low income parts of Maine as well as immigration, and long-term changes are going to involve fixing unemployment as well as keeping employment in Maine.
The immediate changes that need to take place is going to be revolved around the education system. This is not for secondary schools such as colleges and universities. This is to assist grades K-12 students in becoming the best they can be and assuring they reach their maximum potential. How we are going to do this is by switching to the standardize education program also known as common core. This has been implemented in Maine cities such as Westbrook and Cape Elizabeth however these are only for math classes and are slowly being implemented into the new generation of students.
However, this change needs to be implemented immediately to assure that our state has as high of an education program as we can. This program requires that you pass each unit in a course with an 85 or higher. This allows teachers to know for sure that students have learned the material given and are not being pushed through grades. This is a frequent problem for the modern-day grade school kids, they are being pushed through when not ready. In public schools an 85 is a B- and will require a student to push students to achieve. The passing requirement is a 70 which is far too low to have a strong educational program which is going to be the backbone of all our solutions to help Maine’s economy.

Some changes that can’t be made immediately but can be solved soon are fixing lower income cities and areas throughout Maine such as Westbrook, Portland, and Lewiston. How we are going to do this is invest in better rehabilitation programs as introduce and educate the youth on the effects of drugs. Currently, the popular drugs are opioids and heroin. These drugs are very popular in these three cities in Maine with as many as 418 deaths from the usage of heroin alone.
This statistic does not include pills or other drugs and does not include the amount of people estimated to be using. This is an increase by 40% increase from 2016 to 2017. We need to make sure these people aren’t getting incarcerated and untreated just so they can come out of penitentiaries worse off than when they went in. Many of these users and recovers get place in Section 8 housing which is a cheaper alternative for people of lower class status can still maintain a living space.
However, as good of an idea as this may seem, there is much fixing that needs to be done. Many immigrants that come from primarily Iraq and Somalia also live in Section 8 housing as it is a cheap place for them to live so they don’t come to the United States homeless. This is an unpleasant environment for newcomers to arrive in. As many of these people are from war torn countries and having that easy access to drugs may persuade them to not to do right with their new life in the states. As for the recoverees and ones trying to recover, getting thrown back into Section 8 housing after incarceration or rehabilitation is just asking for them to go back to their old lifestyle as a drug addict. By educating the youth and investing in better rehabilitation programs instead of just incarcerating our people, we can create a stronger, more educated workforce.
Some long-term fixes that we can expect to make over the next 4 years is fixing unemployment and keeping employment in our own state. Maine currently has a 2.7% unemployment rate and has the 3rd lowest unemployment rate in the country, which is great but we can always look to improve and do better. We must stop making cuts in the educational departments and make budget cuts in areas such as defense as we spent 2.6 billion dollars in defense alone in 2015. If we could cut some of that money out and invest in job creation programs this could help reduce Maine’s unemployment rate tremendously.
The second-long term fix we can make is keeping our Maine residents working in our state after college. I suggest we use the idea of making the first two years of education free for students if they work in Maine for 10 years after they are graduated, and this will be covered upon completion. Many high school graduates do not want to attend college do to the ridiculous price it costs to be educated in this country and we can’t blame them for not wanting to attend for that reason. This will allow young adults, immigrants, and people of lower income to be guaranteed and education and allows them a place in the workforce.
To review what we expect to accomplish over the next 4 years is going to be the transition to the standardized program by the next school year, invest in better rehabilitation programs and fix lower income cities throughout Maine, and lower the unemployment rate by covering an associate’s degree for all Maine residents as long as they work in this state for 10 years after they graduate as well as cut down on defense. My closing statement being a more educated workforce is a stronger workforce. This will allow people to be more versatile and useful in our society.