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GCSE: Economy & Economics
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What are the government's economic objectives?
- 1 The government has four main objectives for the economy. These are called macroeconomic objectives. The relative importance of each varies from time to time and they are all interlinked.
- 2 Economic growth as measured by an increase in Gross Domestic Product (GDP) which the total value of everything produced in a country. This means that income will be increasing across the country.
- 3 Low unemployment means that fewer people are actively seeking employment. It is likely to come at the same time as rising growth. There will always be some unemployment as there will be people between jobs but the government usually likes to minimise it as it is expensive, unpopular and a waste of human resources for the economy.
- 4 Low inflation means that prices are only rising slowly. High prices means that goods of the country become less competitive compared to foreign countries and so will lead in the long run to lower growth and more unemployment. Inflation usually increases as growth increases so to achieve both is a difficult balancing act for a government.
- 5 Balance of payments equilibrium means that the value of goods and services imported equals the value of goods and services exported. This has become less important as an objective in recent years. Higher growth usually means more imports so the balance of payments also worsens as the economy grows.
What are the government's policies to achieve these objectives?
- 1 The government has several weapons it can use to adjust the economy to achieve the best balance of the economic objectives. Some of these are used at any time and some announced in the annual budget.
- 2 Interest rates can be increased or reduced to affect the amount of money in the economy. If interest rates are high, it becomes more expensive to borrow money so there will not be as much spent. This is mainly used to reduce inflation. Strictly speaking this is not a government action as the Bank of England decides on the best interest rate in the UK.
- 3 If interest rates are reduced, it will increase the amount of money in the economy as it becomes cheaper to borrow and there is less inclination to save money. There should therefore be more investment and spending which should lead to more growth.
- 4 The government can change the amount that it taxes and spends. By reducing tax, spending more and borrowing the difference it can increase spending in the economy so stimulating growth. It can increase tax or reduce spending to reduce inflation.
- 5 Recently, the Bank of England has tried quantitative easing to increase growth in the economy. This involves increasing the amount of money in circulation, again stimulating spending.
What are the long term policies for growth?
- 1 In the long run, the government would like to increase growth without having to use the above measures too much. This involves the use of supply side policies which aim to increase the amount that the economy can produce without setting off inflation.
- 2 Policies to increase productivity include privatisation (selling off government owned business so that it can be run competitively), deregulation (making it easier for businesses to compete in certain markets) and stronger competition laws. The aim is that increased competition will force businesses to become more efficient.
- 3 Encouraging investment and new businesses should increase growth. The government can give tax breaks for research and development, reduce corporation tax and give encouragement to new businesses.
- 4 Making the labour market more competitive should also improve the economy. Measures taken here include reducing the power of trade unions. Improved education and training should also make the workforce more productive.
- 5 Tax and spending is used as an incentive for people to work by for instance reducing rates of income tax and reducing welfare payments so people are more inclined to work.
* The unsuccessful Cadburys BrunchBar could cause sales for the new bar to fall. * Product which doesn't meet customer demands, will most probably fail to succeed. The above table shows many things Cadburys should be aware of when launching a new cereal bar, the main one which I feel could affect Cadburys would be the fact that other brands such as Kellogg's will most probably continue dominating the market. Although a few threats there are still many opportunities Cadburys should be looking out for such as ensuring they meet consumer demands therefore ensuring high sales.
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This is in stark contrast both to the late 1980s and early 1990s in the U.S., when many bank mergers involved relatively feeble banking companies being acquired by somewhat stronger organizations, as well as to some large bank mergers abroad, most notably in Japan. Today the U.S. banking sector is in good function, with record profits and relatively low amounts of problem loans. For example, the return on average assets in 2003 for the two merger targets, Bank One and Fleet Boston, were 1.27% and 1.34%, respectively, while the top 50 bank holding companies averaged 1.28%.
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China, as a crucial country in the world, is suffering from a variety of costs of economic growth while the economic growth is incredibly fast in recent years.
For instance, since recent years, a lot of Chinese local firms have imported technology and equipment from overseas to product efficiently and grow faster. However, new facilities mean less demand of labours, which could also mean that plenty of workers will lose their jobs as their skills are outdated. The job vacancies are so limited in comparison with the huge Chinese population. In every year, there are millions of graduates that cannot find suitable jobs. As a result, it could cause various social problems such as violence and depression leading to suicides.
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These countries control gas prices by the amount of crude oil they produce. To gain a better understanding of how the United States gets its gasoline and who supplies it, we will have to take a closer look at the degree of competition. Because of the nature of an oligopoly there is very little competition. The OPEC countries account for nearly 50% of the United States crude oil imports. The top three oil producing countries in thousand barrels per day are: Venezuela (1,372), Saudi Arabia (1,161), and Nigeria (1,044).According to OPEC's website, WWW.OPEC.org, their principle aim is the, "Co-ordination and
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Privatization:Privatization is a process in which the ownership transfers from Govt. hand to private hand.
The private sector is not bound to work as to Gov.'s instructions so it ends the monopoly of Govt. Improving national productivity: Privatization helps to improve the national productivity. The main aim is to utilize the Govt. or natural resources to a maximum possible way. So in this way the national productivity increases. Improving efficiency and profitability: Necessary measures have been taken to safeguard the genuine rights and interests of the workers so efficiency of workers increases which results increase in profitability in every sector. Achieving rapid industrialization: The agenda of privatization covers a wide range of field like industries, banks, development finance institutions, telecommunication, power generation etc.
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In the 1980's new services were introduced as technology advanced such as telephone banking and the Switch debit card which extended the use of the electronic transfer of money to the point of sale. The Organisation also moved into more markets with inception of National Westminster Home Loans and the Small Business Unit in 1980 and 1982 respectively. However the recession and changing financial services environment of the 1990's forced the bank to withdraw from many markets and refocus its activities, adopting the name NatWest.
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Almost all of workers in these factories are peasant workers (min gong) who come from rural areas of other provinces, and 90 percent of them are women age 17 to 23. Workers above 25 are usually regarded as too old. Some of these factories employ children ages under 16. They have a low level of education and are unaware of their legal rights as workers. In general, workers don't sign any contract with the factory. Working hour: Long working hours have become standard in the Special Economic Zone since it was set up at the end of 1970s.
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Rehabilitation of Cynthia with the stoker conversion occurring in 1952 (App B) 3. Purchase of a new diesel-powered boat with 2 shifts, 12-hour working day (App C) 4. Purchase of a new diesel-powered boat with 3 shifts, 8-hour working day (App D) Since ESC was considering other projects with a rate of return of 10%, each of the above options were considered using the same rate of return. The company's balance sheet suggests that management was very conservative. The debt-to-equity ratio in 1950 was 0.075, indicating that the company could easily borrow at the going rate of 3% without fear of bankruptcy.
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Since then, inflation has stayed low in most countries. Inflation is a general rise in prices throughout an economy. The government aims to keep inflation low without affecting other policy objectives. If they are unable to do this, the country will lose international competitiveness, lower export and higher imports. If inflation rises, the government will need to increase interest rates to counteract. Raising the interest rates damages investments, business confidence and employment. Policies that a government may adopt depend on its order of priority.
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The main aim of any company should be to maximise the wealth of their shareholders, and as put forward by Stern-Stewart, EVA should be an aid to managers of company's striving for this common target. The value of a company can also be easily judged with the aid of EVA by analysing the extent to which shareholders expect earnings to exceed or fall short of the total cost of capital. EVA takes into account the full cost of operating costs and capital costs including the full cost of equity.
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Company The tragic events of September 11th 2001 had a devastating affect on industries throughout the world. The travel and tourism industry however was hit the hardest. Increasing fear amongst consumers afraid to fly and a downturn in the world economy caused a drastic decline in the demand for both business and leisure travel causing passenger numbers to plummet. Thomas Cook tour Operations, like it�s competitors experienced high profit losses as a result of falling passenger numbers, added security costs, falls in their share prices and increased insurance premiums in which occurred I the aftermath. Prior to September 11th the travel industry experienced a dynamic growth between 1995 to 2001.
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This is the reason why many utilities in Pakistan are expensive. If the competition structure is an oligopoly, then there is interdependence between firms, as they cannot ignore the pricing policies of the rivals. In monopolistic competition firms have some influence over their price because of their own clientele and USP's. The firm also has to see what the stage of the PLC is. During introduction they can either choose to skim or penetrate the market. The firm would do the former if the product has a strong USP, is technologically advanced or trendy or is operating in a niche market.
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o Political Influence The UK stands to lose political and economic influence in shaping future economic integration if it remains outside the monetary system. o Greater security and certainty Since participating countries have been required to follow disciplined economic such as limits on national debt and the achievement of inflation and interest rates within an acceptable range. The conditions exist to ensure the best chance of maintaining stability and long-term growth across the entire euro-zone. This will benefit all of the participating countries since a more prosperous and affluent region will result in larger potential markets for all.
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In Luton the environment may be scanned most effectively with a PEST analysis to identify key threats and opportunities. The political environment in Luton and the United Kingdom as a whole will have an enormous effect on any operations of The Luton Development Agency and any foreign firms who wish to operate within Luton. When considering the political ideology of the UK, it is apparent that it is a moderately pluralist society because there is no one ideology accepted by all of the inhabitants. The existence of different ideologies will naturally cause different groups to pull in different directions, this is where the strength of the political system comes to the fore.
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George Kennan spelt out the American attitude when he wrote in 1948 that "[The US] has 50 per cent of the world's wealth, but only 6.3 per cent of its population. In this situation, our real job in the coming period is to devise a pattern of relationships which permit us to maintain this position of disparity."1 This attitude could already have been found earlier in the Bretton Woods Agreement, the system that could have been said to be responsible for the post-war economic boom.
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Although US is the originator and architect of the semiconductor technology, especially was outstanding in DRAM (Digital random Access Memory) assembly, US actually struggled to stay in the competition in long run because of the excellent Japanese policy about the foreign direct investment in Japan. Many may argue with various benefits of green field investment that it is good for the host country but Japan never encouraged Greenfield investment by US or by any other countries especially in semiconductor industry.
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Recent industry analyses typically have strong relation with economic theories. There is a theory, belongs to microeconomics, divides industries into categories according t the degree of competition that exists between the firms within the industry, i.e.
of Firms Many Many. Few One Price Control None Some High degree High degree Entry Barriers None. Some Scale economies Scale economies or legal Product Homogenous Differentiated Homogenous or differentiated. No close substitutes. Table 1: Overview of the Four Market Structures1 In this essay, it analyzes the two of them: Perfect Competition and Oligopoly. Perfect Competition is the most competitive kind of market structure. It is considered as an ideal form of economic organization for providing goods and services to consumers as efficiently as possible. Its characteristics are classified as follows: 1. There are many firms in the industry, thus an individual firm's contribution to total industry supply is so small that whether a firm produces at full capacity or not at all, market price will not be significantly affected.
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Discuss the extent to which the economic theories in the Market's Reader can be applied to the "New Economy".
On the other hand, the new economy is rising as a demand of knowledge and idea-based economy. The new economy, which was making success and prosperity used the new technology to produces high quality, low price production, also the new ideas and innovation that apply to all sectors of the economy which enhance the whole economy. For example, 80% of the jobs in US today do not depend on making things, process things, or generate information. In 50s, 60% of the firm's in US could use unskilled labor now a day only around 15 per sent of jobs can use unskilled labor.
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Discuss the extent to which the economic theories in the Market's Reader can be applied to the "New Economy". (50 marks)
The new economy is emerging as a knowledge- and idea-based economy. In this new economy, the key to success and prosperity is the extent to which technology can be utilized, quality can be provided, and ideas and innovation can be embedded in all sectors of the economy. For example, 80% of the jobs in America today do not spend time making things, they move things, process things, or generate information. In 1950, 60% of the jobs could use unskilled labor-today only around 15% of jobs can use unskilled labor.
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1.4 1.4 1.4 1.3 1.3 EU15 1.8 1.8 2.0 2.0 1.9p 2.0p 1.8p Iceland 1.3 0.9 1.0 1.2 1.1 1.5 1.8 Norway 1.5 1.2 2.0 1.5 1.3 1.0 0.1 (Source: http://www.ibeurope.com/Database/Resources/R010inf.htm [02/02/2004]) TEST PASSED 1.2. Government Finances The Treaty stipulates: "The sustainability of the government financial position [...] will be apparent from having achieved a government budgetary position without a deficit that is excessive [...]". This stipulation gave rise to two criteria being drawn up by the Commission for the Council of Finance Ministers.
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"Designers, unlike artists, can't follow their creative impulses, they work in a commercial environment, which means there are a huge number of considerations influencing the design process"
The company was set up with the aim of producing a completely fairly traded product. In addition to ensuring that all labourers are fairly paid, Ipsuis will only use fairly traded fabrics which means a far more limited choice for the designer and considerably longer lead times for a new fabric. Designers in the upper end of the market, rely on their design team to produce work that is in keeping with the image they have worked hard to create.
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"Labour market inflexibility in Europe is the main reason why Europe is not as dynamic an economy as the United States" Critically discuss
The EU is a group of countries with very diverse countries. Each has varied economic, and to an extent political circumstances. Historically, the Second World War changed the countries in Europe a great deal the effect on the USA was little in comparison. European Labour Markets Labour markets can be defined as the way employers and workers are brought into contact with each other. This is how conditions of work and wages are decided. Some may be formal others informal. So, labour market flexibility is simply the flexibility of labour markets.
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Medium-sized companies in the sector tend to have a more limited brand offer, but they also trade on at least a national level, in order to maximise the returns on brand investment. Children are a major consideration in the confectionery market. According to the consumer research commissioned for this report, 44% of adults aged 18+ buy most of the chocolate and sweets for the children in their family, and 29% agreed that most of the confectionery they buy is chosen by the children in their family.
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a) A portfolio between TECO - Gold Hill's would yield a expected return of 11.2%, with a standard deviation of 2.9%, and coefficient of variation of 0.26. Compared to TECO, this portfolio yields a lower return because Gold Hill's expected return is low and that brings the average between the two down. The opposite occurs to Gold Hill's expected return because TECO's expected return brings the portfolio return up The correlation between the two investments, offers somewhat of a reduction if risk.
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Assess the effectiveness of economic planning in bringing about stability and progress in Italy in the years 1922 to 1940.
However his primary aims were to make the Duce all powerful and later to transform the Italian society and character. If these aims were to be met the economy would have had to be capable of building and maintaining a modern war machine, and would require a population of tough, disciplined and warlike citizens. Italy had to be economically self-sufficient. Italy had very limited amounts of raw materials, the north was modernising but the south was more backward and there was limited literacy amongst the people.
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