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International Baccalaureate: Economics
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This rise in price of pasta has created major problems, and protests in Italy, as pasta is Italy's national dish. Italian's average consumption of pasta is 28kg a year, making it their staple food. Overall, international wheat prices have risen by a startling 350% in the past five years, and global reserves are at their lowest since the early 1980's causing geopolitical stress in terms of shortage of food. Since the price of wheat, which is a commodity, (Homogenous goods that are raw materials in critical industries)1 has risen dramatically over the past 5 years, governments across the world should (in a graphical sense)
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Dumping is however condemned, not prohibited. As long as a domestic industry is not materially injured or not threatened with material injury (ia.ita.doc.gov), a foreign company is not guilty of dumping. Dumping is a threat for a country's economy. However this is only one negative aspect of free trade and is a very uncommon one due to the very strict restrictions. Even if a government feels dumping a tariff will solve the problem, pushing the prices back up and increasing revenue.
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Basically, the government's way to encourage the consumption of a product by lowering its price * Infrastructure: The large-scale public systems, services and facilities of a country that are necessary for economic activity; Social overhead capitol. * Demand: The quantity of a good or service that consumers are willing to buy at a given price in a given time period. In this case it's dairy products. All of these have a large impact on the average dairy farmer's future. The concepts are referred to in the article as so: * Subsidy: It says in the article that these dairy farms in Maine rely heavily on government subsidies to close the gap between sales prices and production costs.
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It goes on to state that about 4.4 million jobs have been lost since the recession began (they speculate Dec. 2007) and the US's unemployment rate has risen to 8.1%. The economic concepts raised in this article are: * Demand-deficit Unemployment: Often called Cyclical Unemployment, is when the economy goes into a downturn where it has a period of slower growth. This usually means that producers cut back on labor because aggregate demand starts to fall.
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Consumption is basically what it says it is: the total spending by consumers of domestic goods and services. Another concept described in this article is that of aggregate demand, mainly because consumption is bound to it. Aggregate demand is the total spending on goods or services in a period of time at a given price. Lastly, Monetary Policy is touched on in this article since there is a deflation in prices those who control monetary policy cut interest rates. * Consumption: Because of the drop in oil and also economist's predictions that it will drop even lower, we can probably guess that consumers will save more money when they buy gas.
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This causes a fall in demand for labour, as firms are cutting back on their production. Number of workers To reduce their output, firms will reduce their demand for labour from ADL to ADL1. "Mr. Pierce was laid off from his job a technical recruiting firm in November". If people are unemployed, there will be even less consumption. Low aggregate demand will result into low inflation of even deflation. This is supported by Philips curve: Inflation Rate (%) A B 0 Unemployment Rate (%) Since wage form a high percentage of total costs, it is strongly reflected in final prices, creating a relationship between unemployment and inflation.
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"Euro-zone exporters have learned to live with a strong euro over the last years ... although of course it will start to hurt a bit" if the single currency continues to rise, he said. The euro rose above $1.50 for the first time in a year on Wednesday, but fell back slightly Thursday, recently trading at $1.4950. The trade surplus of �6 billion and services surplus of �1.8 billion were offset by a wider deficit in current transfers, which rose to �7.2 billion from �6.3 billion in July, and a slightly narrower deficit in income of �1.8 billion.
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Therefore the energy market in China is considered socially inefficient as community surplus3 isn't maximized, creating so a market failure4. Energy consumption creates negative externalities, thus the government decided to intervene and internalize these externalities created by the market. Diagram showing a negative externality of consumption (e.g.: pollution): Beijing's goal is to cut the country's energy consumption by 20% per dollar of output by 2010 in just five years time. By raising the price of electricity, Beijing hopes the disincentive will slowdown the growth of large energy consuming industries such as the metallurgy industry, and force the inefficient factories out of business.
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Cartels are not considered healthy for economies but, as oil is the very Important commodity of our life, So the demand for oil is very Inelastic and all the countries want to make the maximum utilization of the resource by charging a consistent price all over the world and earning the maximum profit also. OPEC controls most of the world production of oil, so, there can't be a steep fall in the prices of oil for OPEC Cartelization (Abnormal Profits)
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He also said that no evidence of cartelization had come to the notice of his ministry. So, can the real estate body's claims be read as support of the Chidambaram/Paswan view, and a response to Prasada's stated lack of complaints? It is not clear if the council has given evidence on price hikes compared with input cost increases for the steel industry. Lack of clarity is the one thing that emerges from recent government responses to rising inflation. Most important is the absence of appropriate systems to throw light on the question of cartelization. We refer, of course, to the case of the missing Competition Commission of India (CCI)
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Economics commentary - The governement of Pakistan has imposed a trade barrier on the import of Tea from India. India tea is under a 10 percent import duty. Some possible reasons for the imposition of Import duty on Tea are given below.
Some possible reasons for the imposition of Import duty on Tea are given below. * To prevent over specialisation * To raise government revenue * To remove balance of payment deficits Given below is a graph that shows the effect of imposing import duty on the import of Tea. Due to the imposition of import duty the prices for Tea rises from 'P-world' to 'P- import duty' because of which the Supply curve shifts from 'S-world' to 'S- world+ import duty' . Therefore there is an overall consumer loss. Areas 'a','b','c' and 'd' shows the consumer loss. Area 'a' shows the producers gain.
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The latest rise pushed the price of the average UK home to a few pounds higher than it was at the end of 2008, but still �13,268 lower than in August 2008. But there was a note of caution in the survey, which pointed out that activity in the housing market remained less than half of the level that was seen in mid-2007. A lack of new homes coming on to the market was a significant factor in the latest round of rising prices, and so prices could stabilise again if potential sellers surged into the market.
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Analyse the impact of the credit crunch on the differing economic systems, and consider its implication.
With little debt being paid off, financial institutions like mortgage providers and banks have been unwilling to take on more debt themselves, and have little money to lend and so these affects have spread around the world. With the examples of the US as a free market economy, North Korea as a command economy, China as a transition economy, and the UK as a mixed economy, I will explore the impact and implications of the recent credit crunch. In a free market economy, for example that of the US, resources are allocated by the price mechanism.
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Liberalisation is not the answer for it, because domestic firms cannot to build new pipelines without state or international support. The Hungarian natural gas market reforms provided by the government would be likely to solve at least some of the existing problems and provide some short-term solutions. In political terms the reforms would be a failure because they do not lead to a decrease in price which is deserved by the nation. It doesn't, however, answer for the problem which is that of the one sided energy dependence.
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As we can see on figure 1 a taxed place on around 90 American goods by the Mexican government, the tax shifts the supply curve upwards by the amount of the tax. In this case it shifts the U.S supply curve upwards, since it is placed on the American producers of the goods and not the domestic producers. Before the tariff, Q2 goods were being consumed at the price of Pu. The domestic production was Q1, and the imports were Q1Q2.
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The collapse in China's trade growth has caused a significant decrease in the number of exports and imports which are a significant part of the GDP equation (X-M). These changes affect the trade balance - the difference between the monetary value of exports and imports made by China. Primarily, this change is beneficial in such way that there is a viable balance of payments and value for (X - M) becomes greater (positive) which helps contributing to a higher value for GDP.
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The market demand for automotives is decreasing as an overall which is also affecting the North American automotive industry pillars GM and Chrysler. As a result of less demand, the companies are forced to decrease the price as the Quantity bought and sold also decreases. The decrease in demand leaves the companies in surplus as supply is lower than demand. While this happens, they are forced to cut down their supply as of overproduction which results in layoffs and factory/plant closures.
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had been made to the money supply thereby the interest rates had increased. Following on, this cause has resulted in falling sales and commodities. This graph illustrates the basic Aggregate Demand  (AD)/Aggregate Supply  (AS) model and AD curve has fallen resulting in prices falling. This change has occurred following high prices level (inflation) - because of oversupply of money. Because of high prices, the value of money has decreased resulting in AD falling. This has also caused the National Income to drop, unemployment and interest rates to increase. The increase in interest rates raised the cost of borrowing, which meant consumer and investment spending will fall.
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What is G-20? In the year 1999, a forum called Group of Twenty (G-20) was established, aiming to discuss about the important issues regarding the global economy.
Moreover, in 2004, the G-20 has decided a higher standard to fight issues such as money laundering and tax matters. By these actions decided by the G-20, they have helped to give more support for further financial development and growth, not only for the 20 countries, but worldwide across the world. Ranging from countries in Europe, Africa to Asia, these countries altogether control 90% of the total gross domestic product (GDP) of the world, 80% of the world trade and two thirds of the world's population.
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Californias Trade with Mexico. Intra-Industry trade is beneficial to US firms such as Mercury, because it allows for specialization. Mexican factories are able to produce computer parts at cheap prices, and we are able to assemble these and provide spe
Californian Exports of electrical equipment and computers to Mexico in the 1990s Industry % Change 1996-7 % Change 1997-98 % Change 1998-99 % Total of California Exports Electrical Equipment, Electronics 3.4 -4.0 5.9 28.8 Industrial Machinery, Computers 3.5 -8.1 5.7 25.7 Graph of the change of California's exports of electrical products in the 1990s As can be seen above, except for the small decrease in growth in 1997-8, this export industry has grown throughout the 1990s. In 1999, Mexico became California's largest export market, and in 2008, California exported US$ 20.5 million2 to the country.
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With the help of a diagram, explain three factors that would cause a currency to appreciate in value.
This is known as exchange rate, when the value of one currency is expressed in terns of another. There are three types of exchange rates : 1. Fixed exchange rate 2. Floating exchange rate 3. Managed exchange rate The one that we will be looking at is Floating exchnage rate, this is a regime where the value of the currency is determined by the demand and supply for it so there is no government intervention to influence the value of it. A currency that uses a floating exchange rate is known as the floating currency.
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The major cause of inflation is the extra printing of money. Increasing prices are a reaction to this. With more money, it is reasonable to assume that the value of goods and services become less so therefore prices go up. The price of crude oil increased from the mid $60's to up to $82 per barrel. This was a very sudden change in price. The level of inflation never reached this high as it had maintained a $10 range starting at $65 for more than 11 weeks. Economic recovery is being shown and demand and supply for gasoline is predicted to increase in the future but none of this will stop the rise in price of oil.
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benefit to individuals. This can be shown in the market diagram for tobacco. Market for tobacco showing negative externalities S P3 P1 P2 Q1 Q2 Quantity of tobacco (hundreds of tonnes) MSB is the marginal social benefit (social demand). It is the demand curve showing social demand for tobacco. MPB is the marginal private benefit (individual demand). The vertical distance between the two demand curves is the negative externality, i.e. P3-P2. When MSB = MPB, there is no market failure as the good is not being overproduced anymore. Therefore to decrease the negative externality, it must be incorporated into the price, thus decreasing the quantity demanded to equal the MSB equilibrium quantity (Q1).
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Growth is obviously a good thing. This is the set view of economic growth, as it tends to be treated as the main "stepping stone" of economic policy for both developed and developing countries. However, it may not always be supreme. Possible costs and consequences of growth can include the following key aspects. The major problems have been required to be defeated by following the model of sustainable development; "economic growth that can continue over the long-term without non-renewable resources being used up"1, which many economies now aims for.
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"Capital accumulation increases productive capacity and allows higher output, which then leads to more savings, and so on."2 This can be seen as a vicious cycle, where this model highlights the importance of each of the four factors. In Figure 1: The Harrod-Domar Model, the focus is particularly on the importance of investment and the need for a flow of savings to enable this. In relation to developing countries; domestic savings are repeatedly deficient, thus growth cannot occur. In order o a developing nation to accrue the savings, they may need to draw in resources from abroad, in forms of aid or foreign direct investment.
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