...LA TROBE UNIVERSITY SCHOOL OF ECONOMICS AND FINANCE SEMESTER ONE 2010 MID-SEMESTER EXAMINATION ECO2GLO: GLOBALISATION Solution guide You must give reasons for your answers; no marks are given if no reasons are given or if the reasons given are incorrect. 1. Are the following statements correct? 1. During the first wave of globalisation, Britain was the only country in Europe that supported free trade. (1 mark) No, many other countries supported free trade until disrupted by the world wars. 2. When restrictions to imports from the New World came down in the first wave of globalisation, grain prices fell in Britain and many parts of Western Europe. This was bad for both landowners and the manufacturing workers in Britain and Europe. (1 mark) NO, bad for landowners but good for manufacturing workers (as consumers) 3. During the First wave of globalisation, unlike at present, international movements of goods and capital increased rapidly but labour did not move internationally on a large scale. (1 mark) The period known as the age of mass migration from Europe to the new world. International capital movements (FDI) was also arising. 4. During the first wave of globalisation, there was not much international integration of commodity markets. (1 mark) The period for great international commodity integration [total 4 marks for Q1] 2. Consider a ‘small’ country that produces garments and computers. Garments are relatively more labour-intensive...
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...solutions, or a unique solution. You may solve two linear equations by either substitution or elimination. Substitution: Use one equation to solve for one variable in terms of the other (say, x in terms of y). Then substitute this relationship for each occurrence of x in the remaining equation. Now solve the remaining equation for y. Given that you know x in terms of y, you also know y. Elimination: Add a multiple of one equation to eliminate a variable (say, x) from the other equation. Solve the resulting equation for the remaining variable (y). Substitute this value of y in either of the original equations to find x. Linear Inequalities: One Variable Use the following rules to solve for the set of values satisfying a linear inequality. If you add the same number to both sides of an inequality, the resulting inequality has the same...
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...unique solution. You may solve two linear equations by either substitution or elimination. Substitution: Use one equation to solve for one variable in terms of the other (say, x in terms of y). Then substitute this relationship for each occurrence of x in the remaining equation. Now solve the remaining equation for y. Given that you know x in terms of y, you also know x. Elimination: Add a multiple of one equation to the other equation to eliminate a variable (say, x) from the other equation. Solve the resulting equation for the remaining variable (y). Substitute this value of y in either of the original equations to find x. Linear Inequalities: One Variable Use the following rules to solve for the set of values satisfying a linear inequality. If you add the same number to both sides of an inequality, the resulting...
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...a unique solution. You may solve two linear equations by either substitution or elimination. Substitution: Use one equation to solve for one variable in terms of the other (say, x in terms of y). Then substitute this relationship for each occurrence of x in the remaining equation. Now solve the remaining equation for y. Given that you know x in terms of y, you also know x. Elimination: Add a multiple of one equation to the other equation to eliminate a variable (say, x) from the other equation. Solve the resulting equation for the remaining variable (y). Substitute this value of y in either of the original equations to find x. Linear Inequalities: One Variable Use the following rules to solve for the set of values satisfying a linear inequality. If you add the same number to both sides of an inequality, the resulting inequality has the same direction as the original...
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...Supply and Demand Globally Shirley Leo Argosy University This discussion will include the definition and how it is used to determine the demand for labor. The factors used to determine the supply of labor market will be discussed. This will include the factors that have changed the supply of labor market over the last twenty years. Price and quantity of labor determination over a period of will be explained. Income inequalities will also be determined, if there are any. The way that income inequalities are measured, and how they have changed from 1980 to the present will be discussed. What role does the government play in the terms of inequality? There will also reasons for this and against this provided. Next, nations trading will be discussed. The concept of “Comparative Advantage” will be discussed. If a nation had an isolation policy would they be better off economically will also be answered. Then the trade balance of the United States will be discussed. The problems with having a negative trade balance, and how it can be corrected will be included in this discussion. The last thing that will be discussed is the exchange rates. The significance of currency devaluations concerning the United States, as well as other countries will be the last thing discussed. Now, to discuss derived demand. Derived demand is the product that is produced...
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...Inequality for Women in America Equality has always been an issue in America. Inequality in America has had many different reasons. One reason for inequality is that men have always been superior to women. Women didn’t have the same rights that men did. Women couldn’t have a job or vote. Women finally got the right to vote in 1929. Now even though women have pretty much the same rights as men do, inequality is still greatly noticed. Women still don’t get treated as equals. Women get higher prices in auto shops and hair salons. Because men don’t think of women as equals when in an auto shop, women are taken advantage of and given higher than average prices. In hair salons or barber shops women are given higher prices than men, even for the same haircut, because women will generally pay more to have the look that they want. Women also get the “credit” for poverty. Poverty is usually feminized completely. If a family is at or below the poverty line, the woman in the house is blamed for it. Inequality in America is not gone, it is just under the surface where not many people may see the truth behind it. In America the average price for a woman’s haircut is $44, but the average price for a man’s haircut is $28. (Risen) Some would blame the difference in price on the difference in price on the length of hair. The price for a woman to get a haircut is almost double what a man’s haircut price is all over the nation. The most expensive haircut in the nation for a woman is $73....
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...income inequality benefits everybody” written by George F. Will was published in the Washington Post. Will begins the article by explaining that workers in China manufacture goods for other countries and earn about as much as Americans would spend on a latte each day. The author then explains that this cycle increases American’s disposable income. In the next paragraph, Will mentions that most of the people who were the richest people in the 1980s were no longer the richest people in 2013. He then suggests that the world needs more billionaires like Mark Zuckerburg, Steve Jobs, and Bill Gates. Although these people would be able to charge more money for their products, they charge less because more people will buy their products if they are sold at a lower price and “profits attract imitators and innovators.” In the next section of this article, Will explains that he believes that monopoly profits are a good thing because they show people how...
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...I hear people talking about the rise or fall in gas prices or how the cost of a barrel of crude oil has just gone up or down .10 cents. I also hear about how the current hurricane season could pose a threat to the oil industry, as it did last year with hurricane Katrina, putting oil refineries under water or causing extreme damage to them. In this essay I am going to discuss the shifts and price elasticity of supply and demand in the oil and gas industry. I am also going to discuss the oil and gas industry’s positive and negative externalities, wage inequality, and monetary and fiscal policies. Lastly, I will discuss the economic affects and influence on the oil and gas industry. Shifts and Price Elasticity of Supply and Demand The price elasticity is the affect of the price for a good on the demand of that good. If consumers are not affected by the change in price then this good would be referred to as inelastic. If consumers are affected by the change in price then this good would be referred to as elastic. The oil and gas industry is inelastic when the prices rise because, although consumers slightly reduce their consumption of oil and gas, consumers still purchase oil and gas. With gasoline prices in the U.S. approaching an average $3 a gallon, Americans are moaning about the rising cost, but so far they are resisting big changes in their gas-guzzling ways. The early results: High prices do have some effect, but prices would have to be higher than they are today -- and...
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...Income inequality damages growth, OECD warns Chris Giles in London Rising income inequality over the past 30 years has damaged growth rates in rich countries by limiting educational opportunities for poor children, according to research by the OECD, the group of mainly rich nations. The finding that higher inequality harms economic performance mirrors the results of a similar study by the International Monetary Fund earlier this year. But the OECD’s analysis goes further because it concentrates on rich countries and attempts to establish the exact cause of inequality’s harmful effects on growth. The OECD said the research showed governments should focus policy on ensuring poorer children gain better education and the supporting people into employment. As inequality has moved higher up the political agenda in rich countries, there has been a flurry of research papers looking into the link between inequality and growth. Clear conclusions have been difficult to achieve because economic theory is ambiguous and the subject has been plagued by research finding spurious associations in the data rather than meaningful causal relationships. Higher inequality can hinder growth by destroying trust in society, hitting investment in skills and reducing demand growth for goods and services from poorer families who tend to spend more of their incomes. But it also provides greater incentives for people to strive to climb the ladder of opportunity and can provide necessary savings to...
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...Final Paper Wealth Inequality in U.S. and Economic Efficiency Over the last decade, income inequality has become one of the most important issues in the U.S. and a subject of a lot of debate. There is a prevalent idea in the society that the wealth inequality in United States is currently at the highest level in the history after steadily raising for a number of decades. The financial crisis is said to have contributed to this significant gap between the top 1% and everybody else. People view it as an inherently negative thing, and fight hard to promote the equality and income redistribution. This paper examines the causes of inequality; the relationship between wealth inequality and economic growth and the hypothesis on how policy measures can be designed to mitigage the income disparity both in U.S. and in the rest of the world. The researh is based on the theory that inequality is an essential aspect of an efficient free market economy that adversely affects economic growth when in excess. When it comes to global wealth inequality, people often tend to accuse capitalism. In fact, the real laissez-faire capitalism doesn't exist anywhere on our planet. According to its definition, laissez faire is "an economic system in which transactions between private parties are free from intrusive government restrictions, tariffs, and subsidies, with only enough regulations to protect property rights." It has been previously proven free markets lead to the most efficient use of economic...
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...1. Functionalist questions a. What are the functions of Wal-Mart for society? Wal-Mart is an American multinational retail corporation and one of the leading discount department retail stores (Wikipedia). It is the highest- grossing company in the United States (Fortune 2008a), and is by far one of the most successful companies worldwide. Wal-Mart offers a place to buy the majority of our goods under one roof like electronics, furniture, clothing, pharmacy, sports, food, books etc. Wal-Mart sells good at lower price than the others and this is even shown by its slogan “save money, live better”. It drives out smaller and sometimes even the expensive stores out of business due to its lower prices. Wal-Mart provides jobs for thousands of people in the society including the low-skilled people. It represents a trend of one stop shopping where we can get almost everything that we want. b. Are they the same or different from the functions of Wal-Mart in our individual lives? How do the two types of functions connect? One of Wal-Mart belief and function is the respect for the individual. They have given importance of respect for every individual and every member of the community. For individuals; Wal-Mart offers convenience, good pricing and multiple products under one roof. It reduced the overall cost to consumers as they don’t have to go from one place to another to buy different goods. c. Does Wal-Mart have both manifest and latent functions? Manifest functions are conscious...
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...1) Derived demand is used in economics to describe the demand that is placed on goods or a good or service as a consequence of changes in the price for some other related good or service. It is a demand for some physical or intangible item where a market exists for both related goods and services in question. The derived demand can have a significant impact on the derived good's market price. The concept of derived demand helps to control the demand for labor through one product needing the use of another product. (Tejvan Pettinger, November 28, 2012) 2) The factors that govern the source of labor in a market are buyers and sellers. Most markets we come across individual people such as you and I and groups of people such as families that needs goods and services and the firms which supply goods and services, such as stores. The labor market works in a parallel way, except the roles are reverse. This market, mostly all firms require labor and individuals such as you and I supply their requirement for a wage compensation. By looking for a job, you are participating actively in the market of labor. The labor market works much like other markets. There are buyers and sellers and they both interact with one another to determine a price of an item. In this case, the "good" being bought and sold is labor and the price for that good is the wage compensation mention earlier. That is, in the labor market, employers are willing to buy more hours of labor at lower wages than at a higher...
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...are many people that view free trade as destroyer of economies and a catalyst of poverty. Critics of free trade have pointed out that in the short-run, free trade causes a loss of jobs which in turn causes a rise in poverty levels. It is interesting to note that the argument for free trade and the argument against free trade are inverses of each other. Proponents of free trade see it as a tool to stimulate an economy while detractors see it as a policy which exacerbates poverty, causes dependency and reduces economic stability. In general, there is no consensus on free trade. Economists see free trade as the devil that we know. While imperfect, it is the best we have to work with. Popular opinion sees free trade as a cause of inequality. Even though it alleviates poverty and causes economic stimulation in the long-run, it can cause the exact opposite in the short run. The pros and the cons of free trade must then be weighed, which will then allow us to determine if free trade is truly a beneficial trade policy. Therefore, this discussion will weigh the benefits and harms of free trade and will prove that although imperfect, free trade is the best trade policy we have to work with. While free trade can cause some harm, adopting economies would overall be worse off had they not adopted free trade. Furthermore, it will be shown that most domestic distortions can be solved by a surgical policy aimed directly at the source of the market failure rather than a change...
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...Questions for Article 3 Seminar 3 (Week 4) “Why Is Income Inequality in America So Pronounced? Consider Education”, by TYLER COWEN – May 17, 2007. 1. The article states, "starting about 1950, the relative returns for schooling rose, and they skyrocketed after 1980. The reason is supply and demand….Those in need of skilled labor are bidding for a relatively stagnant supply [of educated workers] and so must pay more." U.S. trade as a fraction of the economy has also grown somewhat since about 1950. Compare the statement from the article with the prediction about the distribution of income from Heckscher-Ohlin model. The Heckscher-Ohlin model predicts that an economy will be relatively efficient in producing goods that intensively use factors of production, which are relatively abundant, and that owners of abundant factors of production will gain from trade and owners of scarce factors of production will lose from trade. From the article, it is not clear if the U.S. is abundant in educated workers relative to some other factor of production, like land, capital or unskilled workers, but it is arguable that the U.S. is relatively abundant in educated workers relative to unskilled workers compared to many countries that it trades with. In contrast, the statement from the article does not consider trade per se, but simply the supply and demand of educated workers, which can change due to trade or for other reasons. 2. What is wrong with claiming that changes in the...
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...A disturbing sign of decline in the American economy has caused many to sound the alarm bells. Income inequality represents a significant danger to the nation and is growing worse over time, leading the 2013 winner of the Nobel Prize in Economics to call it, “The most important problem that we are facing now” (Christofferson, 2013). A significant contributing factor to this is the stagnant minimum wage. Raising the minimum wage will not only decrease income inequality, but also raise millions out of poverty, spur consumer spending, and ultimately lead to a more efficient workplace and workforce. Therefore, America needs to adopt one of the currently proposed $10.00+ minimum wage policies being discussed in the political arena and ensure it is being used in a responsible way to fight these problems. The federal minimum wage has went without a change for nearly a decade twice, from 1981 to 1990 and 1997 to 2007. There have been many more multi-year gaps as well (Federal, n.d.) As a result, the minimum wage has not kept pace with inflation over the last 40 years. The purchasing power of the $7.25 minimum wage set in 2009 has already dropped by 5.8% by 2013 (DeSilver, 2013). Since 1968 the power of the minimum wage is down 23% after adjusting for inflation (Boushey, 2014). There is, however, another way of weighing the minimum wage instead of just against inflation. In 1968 the minimum wage was 53% of the average wage for hourly lower level employees, compared...
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