Macroeconomics Case Assignment Essay

GDP: Questions: 1. Assume that consumer spending is $1,000, government expenditures are $300, investments by industry are $150, and the excess of exports over imports is $200. Compute the GDP. (Please show your work) The basic formula for calculating the GDP is: Y = C + I + E + G C=1000; I=150; E=200 and G=300 Y=1000+150+200+300=1650, Y=1650 2. If we are able to increase our domestic energy production, and that allows us to import less oil from foreign countries, briefly explain what will happen to the GDP. If Exports exceeds imports then it will add to the GDP but if imports are more than the exports it subtracts from the GDP. With this being said if we import less oil from foreign countries then it would positively impact the nation’s GDP. Inflation Questions: 1. If the CPI went from 100 to 104 during the past year, the rate of inflation, in percent, was? (Please show your work) Rate of inflation = (104 – 100)/100 x 100 = 4/100 x 100 = 4% 2. If the CPI went from 231 to 234 over the past year, the rate of inflation was? (Please show your work) Rate of inflation = (234 – 231)/231 x 100, = 3/231 x 100, = 1.30% Unemployment rate Questions: 1. Assume the entire civilian labor force is 20,000 people and the number of unemployed is 2,000 people. Compute the unemployment rate, in percent. (Please show your work) Unemployment Rate= 2000/20000 = 0.1 *100 = 10 Unemployment Rate=10% 2. Assume the entire civilian labor force is 20,000 people, the number of unemployed is 2,000 people but, 500 of the unemployed have now stopped looking for work. Compute the unemployment rate, in percent. (Please show your work) Unemployment Rate=1500/19500= 0.078 Unemployment Rate= 7.8% International Economic Trends 1. Compare the four countries in terms of Output and Growth (Real GDP). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2011 changes are addressed. The 2008 economic contraction affected the world economy. 2008 seen the housing market crash both here and in Japan. By 2009, Canada, Japan, the United Kingdom, and the United States all saw negative economic growth. Japan’s economy was hit the hardest with -10% growth in 2009 as demand for their products weakened. Canada was the last to fall into negative growth and experienced the least negative growth of the four countries. All experienced a partial recovery in 2010 as GDP came out of negative growth and each seen minimal growth. The global economic crisis, however, hit the country’s mainstay exports hard and brought on Japan’s worst recession since World War II, in late 2008. Since mid-2009, Japan has limped back into recovery, helped by exports and stronger capital investment. 2011 was looking up for the Japanese economy, relatively speaking, but the earthquake and tsunami in early March 2011 has put the economy in a tailspin with a large portion of the country affected not only by the devastation but the effects of the nuclear power plan leakage. Canada, the UK, and the U.S. appear to be going into the double dip recession as the economies in 2010 were making slow recovery, 2011 has seen more contraction. The monetary policies of all four countries have slowed the pace of the recession, but are going to be unable to fix the problems, because the national debt are so high, deficit are rising, and projections are not good. Monetary policy, keeping interest rates low and printing more money can only do so much; fiscal policies implementing stimulus packages have foreseeable failed and only added to national debts. 2. Compare the four countries with respect to Inflation and Prices (CPI). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2011 changes are addressed. As the economies of Japan, Canada, the UK, and the U.S. were entering the recession in 2008, prices and inflation had hit a high, but began to fall as the GDP fell. GDP and CPI are nearly identical images when looking at the graphs of each. Prices fell as the economy tanked because consumers clearly did not have the purchase power. As the economies of each country experienced positive growth rates, CPI began to rise. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. When comparing the four countries, Canada, UK and U.S. have experienced very similar changes in CPI, where Japan has remained relatively unchanged for 2011, but mimicked the others in 2008 and 2009. Inflation for 2011 in Canada, the UK and the U.S. is increasing. Some reports say peanut butter will see a 40% price increase in the next week, which may be due to a poor peanut growing season. According to the United States Department of Agriculture’s Consumer Price Index, all food increased 0.8 percent between 2009 and 2010 and is forecast to increase 3.5 to 4.5 percent in 2011. The increases in food prices affect the overall purchasing power of consumers, combined with inflation, consumers are not going to be able to purchase our way out of recession. 3. Compare the four countries regarding the Labor Market (Unemployment Rate). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2011 changes are addressed. Regarding the labor market, United States posted the most consistent rates of unemployment ranging from 1.9% to just about 3%. In stark contrast, Japan posted the most unpredictable figures in terms of unemployment percentages; 0.8% in 2008 to -9.8% in 2009.In 2011, Japan recorded a percentage change of about 2.0%. As is the case with the USA, UK’s rates never went below 1% during this period. The future of the labor market is therefore quite promising in the USA as compared to the other countries in this particular category. Questions: 1. Assume interest rates on Treasury bonds, with the indicated time to maturities as follows: 15 years = 7.72% 20 years = 8.72% 25 years = 9.64% 30 years = 10.18% The differences in rates among these bonds is caused by: (please briefly explain your choice) a. Tax effects b. Default risk premiums. (Default risk premium will cause the interest rates among the T bond with different time period with different rates) c. Maturity risk premiums d. A down sloping yield curve e. Liquidity risk premiums 2. Which statement is False? (Please briefly explain your choice) a. The default risk premium is applied to all bonds including U.S. Government ones. b. The liquidity premium requires that an asset can be sold both quickly and for fair market value. c. The inflation premium is added on to the required return to protect the purchasing power of an investors earnings. d. The market risk premium is added to all bonds, even U.S. Government ones. (Market risk premium will be the same for all investors since the value is based on what actually happened). 3. Over the next 3 years inflation is expected to be: Year one 2.5%, year two 3.5%, year three 4%. What should investors require for an inflation premium on a Treasury bond with a three-year maturity? (Please show your work) Inflation premium on year 3 = (2.5+3.5+4)/3 Inflation premium on year 3 = (10)/3 Inflation premium on year 3 = 3.33% 4 If the rate of inflation is expected to be 0% for the next 4 years will the yield curve have an upward slope? (Please briefly explain your answer) Yield to maturity = = Rf + DRP + LP + MRP + Inflation Premium Everything consistent Inflation premium = (2.5+3.5+4+0)/4 = 2.5 it reduces the 3.33 to 2.50 No it wont be upward it will be downward sloping if the rate is 0 in year four Reference: http://www.investopedia.com/terms/m/marketriskpremium.asp#axzz1uEeDH1nd http://www.cliffsnotes.com/study_guide/Unemployment-Rate.topicArticleId-9789,articleId-9735.html http://inflationdata.com/inflation/inflation_articles/calculateinflation.asp http://www.investopedia.com/terms/i/inflation.asp#axzz1lAEXt7uC http://research.stlouisfed

The pros and cons of Globalization Essay Example | Topics and Well Written Essays - 3500 words

The pros and cons of Globalization - Essay Example addition a crucial debate is continuously rising on weighing the positive and negative impacts of globalization and exploring the people who are directly or indirectly influenced by the changes brought in by this concept. Globalization is a comprehensive and broad topic and covers a huge list of important issues including economic, social, political, cultural, religious and moral etc. The definition of globalization is also defined in the light of all these perspectives. As it is defined by James Rosenau, a political scientist, as as "a label that is presently in vogue to account for peoples, activities, norms, ideas, goods, services, and currencies that are decreasingly confined to a particular geographic space and its local and established practices" (1997, p.360). Most of the researchers bordered their research on the economic impacts of globalization. It is undoubtedly clear that globalization has impacted the overall economic situation of the current world. However, the social, political and other areas also require attention as globalization has affected the policies, education, culture and overall social structure of the states. The economic aspects of globalization are not limited to its effects on microenvironment but it has affected markets on a macro level. The microeconomic effects refer to the technological advancements and the impact at individual firm levels, whereas, the macroeconomic effects involve the collaborative analysis of markets for business purposes (Oman, 1994). The list of positive aspects of globalization includes the excess availability of external finance. This excess amount of finance is helpful especially for the developing countries. The excess availability of excess finance from external sources is evidenced by the IMF, Direction of Trade Statistics Yearbook and World Bank, Global Development Finance, 1999. For instance the increase in capital flows is observed in the East Asia Pacific from 15.8 in 1980 to 36.3 1997.

Visual culture and society Essay Example | Topics and Well Written Essays - 1500 words

Visual culture and society - Essay Example This makes it evident that visual perception, as a tool, plays a major role in human’s approach to life. As per my observation, usage of visual perceptions as a tool to build made-up impressions has a negative impact on individuals’ lifestyles because it provides a fabricated sense of reality. There are a number of evidences that I can provide in order to back up my position about this issue in hand. For instance, in my opinion, advertisement of â€Å"Sting†, an energy drink, portrays a person to get energized after drinking it. However, in real terms, the drink contains a high level of sugar and toluene, which is harmful for human body. In the same way, I have noticed that advertisements of certain brands of cigarettes promote male sexuality, but in reality it harms the society and individuals smoking cigarettes. In addition, ramp modeling, cosmetic advertisements and other fashion industry platforms promote the concept of Barbie-like figure. Consequently, teenagers take harmful slimming pills to gain attractive and slim bodies, which in reality are hard to achieve and should not be considered as a benchmark for beauty because every person is different from other. In my opinion, while looking at certain images and other visual coverage, people thoughts and beliefs are subjected to change as the characters portrayed through images influence them. Vision consists of intangible properties which are invisible, disembodied and dematerialized. Though, not all beliefs can be regarded as negative but it has been seen that most of the cognitive development in individuals is hampered by visionary experiences. It is also seen that most of the general lifestyles of individuals are troubled as they are continuously comparing their lifestyles with those images and characters, which are presenting a luxurious life style. Many individuals or viewers are seen exposed to images, which may cause them to carry out behaviors, which may not be acceptable in the society they

Meeting challenges for sustainable business Essay

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Christian Church in the Middle Ages Essay Example | Topics and Well Written Essays - 1000 words

Christian Church in the Middle Ages - Essay Example The church influenced the way people think. The advent of the church began upon the fall of the Roman Empire. The Catholic Church was the only source of moral authority during the middle ages. The head of the Catholic Church at the time was, just like today, the Pope. Members of the church believed that the Pope represented Jesus spiritually on earth. Under the Pope were cardinals, archbishops, bishops and local priests who were in direct contact with the populace. The pope and the archbishops only presided in important occasions. Normal services were the obligations of the local priest under instructions from the Bishops. The major role of the church during the middle ages was to fulfill the spiritual need s of the followers. Priests gave instructions to peasants and the people living in towns in the faith. They also served important purposes in comforting the members when they are in trouble. When members of the church lost a loved one, the priests would be there to console with the families and ensure an organized send off. According to the church, everybody is a sinner, whether male or female and Christian s could escape the wrath from God by believing in Jesus. They would receive eternal life in heaven through doing good and fully participating in the sacraments. Apart from the spiritual leadership role, the church performed many secular roles. The church owned land and Christians contributed to the wealth creation of the church through tithes. Tithes were a portion of the members’ earnings that they gave to the church. Through canon laws, the church had its court to matters relating to justice. Except the monarchs, the church had authority over the secular leaders. The pope had the power to excommunicate kings and other secular rulers who attempted to challenge him. Some members of the Christian community during the middle ages dedicated their lives to serving God and they became Monks and Nuns.

House of Tata Case Study Example | Topics and Well Written Essays - 1500 words

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Mitigation Strategies and Solutions Essay Example | Topics and Well Written Essays - 1750 words

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