...sell them for their metallic content. M2 = M1 + noncheckable savings deposits + money market deposit accounts + small time deposits + money market mutual fund balances. M3 = M2 + large time deposits (those of $100,000 or more). Near-monies are components of M2 and M3 not included in M1. M3 is distinguished from M2 by large time deposits (certificates of deposits). 5.) There is no concrete backing to the money supply in the United States. Paper money, which has no intrinsic value, has value only because people are willing to accept it in exchange for goods and services, including their labor services as employees. And people are willing to accept paper as money because they know that everyone else is also willing to do so. If the monetary authorities were issuing new banknotes at a rate far in excess of available output, the acceptability of paper money would diminish. People would start to worry about whether the banknotes would be worth much after they received them. Checks are part of the money supply and are not legal tender, but people accept them willingly from people believed trustworthy. The value or purchasing power of money is inversely related to the price level. The Board of Governors of the Federal Reserve System (the Fed) is responsible for managing the United States’ money supply so that money retains its value. 6.) In the first case, the value of the dollar (in year 2, relative to year 1) is $.80 (= 1/1.25); in the second case the value is $2 (= 1/.50)...
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...1. (a) Define International Finance. What are typical reasons why MNC’s expand internationally? DEFINITION of 'International Finance' International Finance is an area of financial economics that deals with monetary interactions between two or more countries, concerning itself with topics such as currency exchange rates, international monetary systems, foreign direct investment, and issues of international financial management including political risk and foreign exchange risk inherent in managing multinational corporations. Expand Markets and Increase Sales Expanded markets and increased sales mean more profits. Profits mean success for a business. They also mean that a business can make contributions to causes that they believe in. For example, MAC Cosmetics is a business that increased sales and broadened their markets in order to become more successful. This business started as a small idea and eventually expanded to a greater establishment by going international. Controlling Expenses Every business wants to have low expenses; so some companies will therefore enter the global arena to minimize their costs. Companies will examine the resources they need and where they can get them at the lowest price. By searching outside of their own borders, companies hope to find more economical solutions to the production and manufacturing problems they have. Business might choose to take advantage of lower labor costs, they might move manufacturing plants closer to natural resources...
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...difficulties in making decisions in how and when to use money. Talking about finance, most of people would link it with monetary terms, material possessions and investment to increase personal assets. For me through finance is more about budgeting. However, I consider it not only as a money management tool to balance my expenses and follow my business’s financial performances but also as an instrument that gives me an opportunity to expand my comfort zone. There are a few vital aspects of finances in my life that I am going to explore in this essay, including personal finance and public finance. The type of finance that plays a big role in everyone’s daily life is a personal finance. Individual can be compared to an organization that faces with financing decisions and investment everyday. In order to purchase or invest, the person has to do calculations and projections to make the best decision. Many people have to compare diverse options like to take on debt, mortgages or through they savings before making investment. For example, to have a chance to attend SCAD I had to work tirelessly for a long period of time and maintain my personal budget and put in savings my earnings. However, I consider SCAD is as much about gaining priceless knowledge to improve my capacity, to learn and interact more effectively with others than it is just about a long-term investment in order to make more profit. We often have to deal with budget balancing, save and spend to maintain stable financial...
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...COMMERCIAL BANKS Commercial banks are important financial intermediaries serving the general public in any society. In most cases, commercial banks hold more assets than any other financial institution, in some cases, even more than Central Banks. Apart from their many functions, commercial banks facilitate growth and development. They lend in many areas or sectors of the economy. Viewed from the real sector, they contribute to investments, employment creation, and by extension the process of economic growth. In Trinidad and Tobago there are 8 commercial banks as follows; • Bank of Baroda (Trinidad and Tobago) Limited • Citibank (Trinidad & Tobago) Limited • FirstCaribbean International Bank (Trinidad & Tobago) Limited • First Citizens Bank Limited • Intercommercial Bank Limited • Republic Bank Limited • Scotiabank Trinidad and Tobago Limited • RBC Royal Bank (Trinidad and Tobago) Limited There are many other institutions such as credit unions, development banks, mutual funds to name a few. However, notwithstanding this commercial banks can be described as the head of the financial system. They are by far the largest mobilizers of savings and providers of loanable funds. They now account for over 50% of the total assets of the financial system and far more than half of the financial savings of the domestic economy. (See Table 1) Assets of the banking System (2001-2008) [pic]With all these resources...
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...undervalued, and cheaper than historic norms, and thus it is better investment than even gold if investors want to “buy low and sell high”. The supply and demand fundamentals for silver are extraordinary. Annual supply is about 650 million ounces, and annual demand is about 800 million ounces. Considering refined and mined known silver reserves, there are far less silver in the world than gold. About 150 million ounces of silver vs. 4000 million ounces of gold. Investors may get so much silver for their money. A bag of junk silver weighs about 55 pounds, and the size of a bowling ball. If investors invested $100,000 into junk silver coins, at $3500/bag, that would give them 28.5 bags each weighing 55 pounds, or 57 bags weighing 27 pounds each, or about 1571 pounds total. Could they imagine moving that much around their house if they had to move? Silver is so cheap it creates physical problems for investors today! Keywords Silver, Gold, Awareness, Differences, Prospective, Investment. Chapter 1 Introduction Lately, value investors are moving towards into silver investment rather than gold investment due their infatuation and brighter prospect gain look continuously. True, both metals have not done very well most almost recently, posting losses in five out the six sessions, but a big-picture view on prices and exchange-traded funds shows just how much silver is turning heads. The industrial and investment demand drives the price of the silver increase robustly, thus...
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...for itself, identified from its vision & mission statements, business principles and its various public reports. * To provide superior returns to its shareholders. Goldman Sachs believes that profitability is critical to achieving superior returns, building their capital, and attracting and keeping the best people. This is a very quantifiable goal and its measured every quarter and is a primary indicator of the health of the firm. It thus relates to measurability of the SMART model1. * Strive to anticipate the rapidly changing needs of its clients and to develop new services to meet those needs. Goldman Sachs is primarily in the service industry which is highly competitive. Thus to ensure that it stays ahead of the competition, it is imperative for Goldman Sachs to continuously evaluate the requirements of its clients and ensure that they are being met.It thus focuses on specificity as mentioned in the SMART criteria. * To identify and recruit the very best person for every job and to offer them the opportunity to develop their career faster than anywhere else. Goldman Sachs is a people driven firm and consider them as their...
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...the new normal, shifting from high speed to medium-to-high speed”. The new growth target set by Beijing is now lower than last year’s 7.5 per cent, and more than 2 percentage points lower than in the past two decades. The government’s ambitions therefore align with the recent slowdown experienced by the Chinese economy since the beginning of the financial crisis in 2008. After the first two years of Xi Jinping’s term, the Chinese economy grew by 7.4 per cent ‘only’ in 2014 – the lowest rate since 1990 – low enough to convince Chinese policy makers to shift to a new policy stance, as they realize previous growth targets are no longer sustainable. The shift to a lower but more sustainable growth target came soon after the International Monetary Fund (IMF) warned last year that a series of danger signs suggested that China would probably face a hard landing in the absence of crucial reforms. More specifically, the IMF said that without change, the risk of depressed annual growth of just 2.5 per cent for a ‘protracted period’ of time was ‘medium’ to ‘likely’ before 2030. Mr Li said that China is likely to face even more serious difficulties in the year ahead, as “downward pressures on China’s economy are building” up quickly and the country is facing “deep-seated problems in development” that can...
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...market can take a bite out of investment returns Forecast business cycleapply well tied business cycle management strategies: production, inventory, HR, Marketing, capital financingmaster building an org that is keenly tuned to the business cycle Recession is a good time to market and increase brand awareness, super time to find great people to hire, most companies are in a panic and lay off great people Org culture is good because when times are tough, major decisions won’t go through unless you all agree Movement’s in business cycle is seen by the GDP GDP= Consumption (consumer confidence, retail, home sales) + Business Investment (ISM manufacturing index) + Gov Spending (fed budget balance) + Net exports (Exports- imports) (monthly trade balance) Economists always distinguish between nominal and real gdp Secular growth trend-upward sloping line Inflation rate determines nation;’s bank’s monetary policy 6 Functional areas of Corporation: -production, inventory, supply chain management -marketing and pricing Corporate finance and credit management Capital expenditures Acquisitions and divestitures HR management Keep low inventory in recession. PACCAR makes inventories smaller when it’s recessionary time Marketing & Pricing: When there’s healthy expansion, start to increase prices Mistake: whenever there’s budget cuts, they want to raise prices, the demand for their prices is often very elastic though. Smart folks will raise their prices ...
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...Learning Objectives Chapter 1 Distinguish between microeconomics and macroeconomics. Explain the factors that drive demand and supply. 2 Describe each of the four different types of market structures in a private enterprise system, and compare the three major types of economic systems. 3 3 Identify and describe the four stages of the business cycle. Explain how productivity, price level changes, and employment levels affect the stability of a nation’s economy. 4 Discuss how monetary policy and fiscal policy are used to manage an economy’s performance. 5 Describe the major global economic challenges of the 21st century. Economic Challenges Facing Contemporary Business Rudyanto Wijaya/iStockphoto Copyright ©2012 John Wiley & Sons, Inc. NASCAR Tries to Restart Its Engine ASCAR is widely known as the most popular spectator sport in the United States. Yet even its most diehard fans are tapping the brakes when it comes to buying tickets to their favorite speedway. Tracks in cities such as Phoenix and Talladega have reported double-digit percent declines in attendance. Just as worrisome is the fact that, instead of watching races at home, fans are changing the channel. Some critics of NASCAR blame a drop in dramatic action and a mandated car chassis design that leaves car models undifferentiated. Others say that the races are just too long and the broadcast commentary is boring. But NASCAR defenders argue that there’s another huge obstacle: the...
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...european colonization in the beginning of the 19th century. Many African countries were being colonized at that time, losing their resources and cultures. Botswana was not united back then, there were members of related African tribes which migrated to the area in the middle of the 18th century. Another reason for this success story is that Botswana did not get affected by the Dutch disease. This term means that the increase in exploitation of natural resources can reverse the industrialization of a country by decreasing the exchange rate. The Botswanan Central Bank knew that they had to manage their currency so that the competition in their domestic industry was maintained. Botswana managed to pull this off. This showed that they made smart moves economically, which...
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...expenses. When I was married to my first wife, I learned how to operate within a two income budget. This came with its own set of challenges as we had double the expenses to cover. My wife, well ex-wife handled most of the finances but I did manage to learn a thing or two. This experience came in handy when we got divorced and I was solely responsible for my financial matters. I think that to this point, I have handled my finances pretty well. Currently my family and I have managed to have money left over after paying our expenses more often than not. We are currently on track to pay off my wife’s van early and are saving for a home. The time, interest, rate and compounding interest all work together to increase the amount of monetary investments. Any changes in these factors...
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...QUESTION 1 Using the Solow Growth Model to explain the growth miracle in China since 1980: 1. What were the main engines of growth for China for the period 1980–2013? 2. Do you expect China's exceptional growth record to continue in the near future? Why or why not? 3. Can the Chinese experience be replicated in other less developed countries? 1. Introduction China has been the subject of economic and social experimentation since the establishment of the People’s Republic of China in 1949 (Assbring 2012, 4). Still, up until the late 1970’s, China was one of the poorest performing economies in the world, impaired by social unrest and economic inefficiencies (Fan, Zhang and Zhang 2000, 8). After a change in leadership in 1978 and while witnessing the success of other East Asian economies in particular, Emperor Deng Xiaoping initiated economic transformation through the implementation of policies embracing the open market. As a result, China has been able to maintain an impressive growth rate averaging 10% over more than three decades; an achievement unsurpassed by any other economy (Ding & Knight 2008, 2). This unprecedented sustained growth begs the question of what is driving this growth and whether this growth can continue to be maintained in the future. Furthermore, is it possible for the Chinese growth “phenomenon” to be replicated by other countries? This paper intends to address these issues by employing the Solow Growth Model (SGM) as a means of...
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...“ It is well enough that people of the nation do not understand our banking system, for if they did, I believe there would be a revolution before tomorrow morning.” –Henry Ford Some may consider those to be strong words, words that many believe to be true. This quote is found in the book that I will be introducing written by author Robert Kiyosaki titled “ Increase Your Financial IQ” the quote sets the pace for what this book stands for: Financial Education. Robert Kiyosaki’s objective through out the book is to illustrate for the reader the major differences between how wealthy people think about and deal with money vs. how the middle class and poor deal with money. He outlines his thoughts in what he calls, the Five Financial IQs. According to Kiyosaki it is not money but knowledge that makes one rich (pg 200). Robert Kiyosaki was born April 8, 1947 to a middle class family. Kiyosaki is an investor, businessman, self-help author and motivational speaker. Along with being a successful author, he is also the creator of the Rich Dad brand, as well as a real estate mogul owning millions of dollars in real estate assets. Kiyosaki is best known for his “Rich Dad Poor Dad” book and other materials published and found on the top 10 best-seller lists of The Wall Street Journal, USA Today and the New York Times. Before becoming a best selling author he began his career as a salesman for the Xerox Corporation a company that sells copy machines. In his popular book “Rich Dad Poor...
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...addressed in this paper is which of these statements will appeal to the likes of creditors, interested investors, and management. Income Statement The income statement takes into account the expenses and revenue. The income statement is also known as the profit loss statement is exactly what it says. The records from these numbers can be linked to how successful a company has been. The use of the income statement is to reveal to investors and management the monetary gains and losses in a certain window of time. This proves the saying that “Time Is Money” to be somewhat of the essence. When expense comes into play, the focus is profit. According to "Investopedia" (2011) “A company’s expense is the costs “economically” that it assumes through the process of trying to gain revenue.” The key is to minimize or reduce expenses without relying on revenues which in turn will yield positive profits. This would be a good focal point that would peak the interest of investors because their main goal is to make smart investments that will yield a positive profit. Creditors could look the income statement to see if it would benefit them to lend to the company. Managers would benefit from the income statement because it would allow them to see where they stand as far as making changes in order to increase profits. They can...
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...Economic Crises April 26 Final Exam Short Essays 1. Many economists think that a flexible exchange rate acts like a “shock absorber” in the face of external economic shocks. Explain what this means and why it is (or might be) true. Flexible exchange rates act as a “shock absorber” - Canada’s experience following the Asian Crisis - commodity prices and the Canadian dollar world price of raw materials fell by 30 percent, world is prepared to pay less for our raw materials. This led to dramatic depreciation of CAD. - compare BC and Ontario situations. BC produced a lot of raw materials whose demand fell. The core of manufacturing in Canada is in Ontario (and Quebec) and the resource sectors are largely in the West and very East. When Asian economies go under the tank and reduce their demand for raw materials – the BC economy goes down, they can’t sell stuff to Asia anymore. But the Canadian dollar depreciates by 10 or 15 percent. A depreciating currency helps everybody who is exporting given whatever the price you’re exporting at. Depreciation is a net plus to Ontario, because its machines, etc. gets a bump up in exports. The boost to Ontario offsets the negative to BC somewhat. What happened in 2002-2006 when world demand increased (China and India phenomenon and U.S economic boom) drove up prices, the Canadian dollar appreciated. Ontario was damaged while the East and West of Canada boomed. 2. Describe and explain the connection(s) between the “financial sector”...
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