Notes, summaries, assignments, exams, and exercises for Economics for Other courses

Executive Summary

This policy paper analyzes Venezuela's recent financial crisis and provides recommendations to the Venezuelan government regarding exchange rate policy.

Venezuela's Economic Crisis

Venezuela has experienced a rapid economic downturn since the implementation of socialist economic policies in 1999. The country's heavy dependence on oil exports to manage the economy has stifled private investment and created an over-reliance on imports for basic goods. The drop in global oil prices since 2013 has plunged Venezuela into hyperinflation, which exceeded 1.3 million percent in 2018. The nation's political turmoil has been exacerbated by a lack of economic development, corruption, and the devaluation of its currency, the Venezuelan Bolivar....

T.11 1. Is

the organization design of the MNE a function of its strategy or vice versa? Is both a function of its strategy and its design also drives its strategy. The objective of organization design is to provide, maintain, and develop the organizational structure that works best toward the achievement of firm’s strategic objectives into workable assignments of rights, duties, and responsibilities for the various units and individual positions that make up the organizational apparatus. The structure can represent a constraint on the firm’s mode of operations and in turn on its strategic thinking.

2. If you

were a top manager in a subsidiary in Mexico, would you expect similar to subsidiaries in London in authority, knowledge flow, or strategic...

International Logistics

International logistics is the process of planning, implementing, and controlling the movement of goods from supplier to customer from one country to another. It describes the activities necessary to get materials to a manufacturing facility, through the manufacturing process, and out through a distribution system to the end user. The goal is to manage a global supply chain at a low cost while providing superior customer service. Firms now typically use electronic data interchange (EDI) via the Internet to coordinate the flow of materials into manufacturing, through manufacturing, and out to customers. This eliminates delays among suppliers, shippers, and the purchasing firm, and reduces paperwork. EDI can also help a...

Why Currency Exchange Rates Change

If our currency is demanded (for example, because our products are demanded), the price of our currency would increase unless we increase the money supply. Conversely, if, for example, people hold assets in our currency but want to sell them, this would lead to depreciation.

Interest rate is the price of our money, because we sell bonds that yield a certain benefit. If we increase the interest rate, we make the bond more attractive. People would invest money in these bonds, and less money would circulate in the economy.

This internal use of interest rates to control inflation also has external consequences. High interest rates make bonds more attractive to foreign investors who would want to buy Euros (or the...

The Euro Crisis

The global economy has experienced slow growth since the U.S. financial crisis of 2008-2009, which has exposed the unsustainable fiscal policies of countries in Europe and around the globe. Greece, which spent heartily for years and failed to undertake fiscal reforms, was one of the first to feel the pinch of weaker growth. When growth slows, so do tax revenues—making high budget deficits unsustainable.

In 2007, EU economies, on the surface, seemed to be doing relatively well—with positive economic growth and low inflation. Public debt was often high, but (apart from Greece) it appeared to be manageable assuming a positive trend in economic growth.

Impact of the Global Credit Crunch

However, the global credit crunch changed...

Hidden Unemployment: Definition and Market Data Effects

Hidden unemployment refers to discouraged workers who are not officially counted as unemployed but are available for or seeking employment. Because these individuals are not included in the standard definition of the labor force, their unemployment is not visible through normal labor market data, such as the official unemployment rate.

The Relationship Between Hidden Unemployment and Discouraged Workers

Discouraged workers are defined as people who want to work but have stopped actively searching because they believe there are no jobs available for them, even if suitable jobs might exist. This group forms the core of hidden unemployment.

Determining Hidden Unemployment in the Labor Market

Economists...

Core Business Terminology

Retrenchment: This occurs when a business cuts its workforce and closes factories; it is also referred to as downsizing.

Commission: A form of payment to an agent, often calculated on a percentage basis of sales made.

Regional trading bloc: An organization of countries that have formed economic alliances for mutual benefit.

Corporate Social Responsibility (CSR): A voluntary approach by businesses that recognizes they have an obligation to assess and take responsibility for the organization's effects on the environment and on social welfare.

Economies of scale: A decrease in the cost per unit produced as the total scale of the production facility increases.

Empowerment: A form of non-financial reward and a motivational technique...

Demand: The quantity of a good or service that consumers are willing and able to purchase at a given price and time. Factors influencing demand include:

1. Price of the Good: Changes in price can increase, decrease, or maintain demand.
2. Prices of Other Goods:
   • Substitutes: Demand increases when the price of a substitute good rises.
   • Complements: Demand decreases when the price of a complementary good rises.
   • Independent: Demand is unaffected by changes in the price of other goods.
3. Consumer Income:
   • Normal Goods: Demand increases with higher income.
   • Inferior Goods: Demand decreases with higher income.
4. Consumer Tastes and Preferences: Popularity increases demand.

Supply: The quantity of a good or service that producers are willing and able to sell at a given price...

Tax Exemption and No Liability

We have established that a taxable event gives rise to a tax. However, in cases of no liability, the taxable event is not completed, and therefore, no tax liability arises. This means that if no taxable event occurs, there is no liability.

An exemption occurs when a taxable event takes place, but the legislature has provided a factual assumption that prevents the tax liability from arising. Article 22 of the LGT defines exemption as follows:

"Exemptions are those assumptions that, despite being taxable, the law exempts from compliance with the principal tax liability."

Methods of Determining the Tax Base

The taxable amount is the monetary value resulting from the measurement and valuation of the taxable event.

There...