Notes, summaries, assignments, exams, and problems for Economy

US Sugar Quotas: Impact on World Prices?

The United States uses quotas to limit sugar imports and protect its domestic producers. Since the US is a large consumer, reducing its imports decreases demand on the world market. This likely leads to a lower world price for sugar compared to a free trade scenario. Conversely, the domestic price within the US increases due to the restricted supply.

The 1933 US "Buy American" Act: Purpose and Impact?

The federal "Buy American" Act was passed in the United States in 1933, primarily during the Great Depression.

• Purpose: To stimulate the US economy by requiring government agencies to prioritize purchasing domestically produced goods.
• Impact:
  • Potential Benefits: Increased demand for American products, potentially

Understanding the Different Types of Banks

Executive Summary

When you think of a bank, the first thing that comes to mind might be the place that holds your checking or savings account. However, there are several different types of banks, all serving different needs. While many of these banks may not be widely known, each plays a very important role in daily financial operations. The banking system, for instance, is a group or network of institutions responsible for operating payment systems, managing loans and deposits, and facilitating investments.

Introduction

This report will look at the following types of financial institutions:

• Commercial Banks
• Credit Unions
• Investment Banks
• Online Banks
• Offshore Banks

Findings: Detailed Bank Types

Commercial Banks

At... Continue reading "Differentiating Financial Institutions: Commercial, Investment, and Online Banking" »

Fiscal Policy

Stimulus

• Purchasing more goods and services (G + N + S)
• Lowering taxes (individual income tax cut, corporate tax cut)
• Increasing income transfers

Restraint

• Decreased government spending (AD = FR = induced decrease)
• Increased taxes
• Reduced income transfers

Classical Economics

1. Supply creates its own demand
2. Excess income should be matched by an equal amount of investment by businesses
3. Interest rates, wages, and prices should be flexible
4. The market is always clear because prices would adjust through the interactions of supply and demand

Keynesian Economics

1. At macroeconomic equilibrium, the economy would experience neither full employment nor price stability
2. Even if the market's macroeconomic equilibrium were perfectly positioned, it would not last
3. Macroeconomic

Accounting Practice Problems: Solutions & Explanations

Depreciation Calculation: Custom Closets Fixtures

Custom Closets purchased office fixtures on January 1. The initial cost was $20,000, and the fixtures had a residual value of $4,000. The fixtures were initially assigned a useful life of 8 years.

After the end of three years, it was determined that the fixtures would be obsolete in 2 more years, and their residual value would still be $4,000.

Depreciation for Fourth Year (Straight-Line Method)

Answer: $5,000

Marketable Securities: Income Statement Reporting

Unrealized Gains/Losses on Income Statement?

Answer: Trading securities

Available-for-Sale Securities: Fair Value Adjustment

On January 1, 2016, Becky Corporation purchased 200 shares of Emily... Continue reading "Accounting Practice: Depreciation, Securities, and Bonds" »

Global Strategic Alliances in International Business

Global Strategic Alliances (GSAs) are crucial cross-border partnerships in international business. They represent collaborations between two or more firms from different countries, aiming to pursue mutual interests by sharing their resources and capabilities.

Types of Global Strategic Alliances

Equity Joint Ventures (EJV)

Equity Joint Ventures (EJVs) involve the formation of legally and economically separate organizations. These entities are created by two or more parent organizations that invest financial and other resources, such as land, facilities, equipment, materials, intellectual property, or labor. Ownership percentages in EJVs can vary, commonly including 50/50 splits or other agreed-... Continue reading "International Business: Global Strategic Alliances and Joint Ventures" »

Neoliberalism can be contemplated from three different points of view.

Neoliberalism as an Ideology

First, it is an ideology. Here, the student must summarize the main ideological points and compare them with the tenets of Keynesianism to understand the economic and political changes we are living today.

Neoliberalism as a Mode of Governance

Second, it is a mode of governance, that is, it is a conception about how the role of government should be. In a few words, governments have to imitate the principles and values of free markets. The most significant consequence is that governmental technologies taken from the world of business and trade are replacing the pursuit of some ideal of the ‘public good’ which characterized the Welfare State.

Neoliberalism

Different Types of Businesses

Classification by Level of Activity

Primary activity: It takes all the natural resources and makes them more useful to consumers (e.g., timber).

Secondary activity: It takes the materials provided by primary industry and processes them in order to satisfy society’s needs (e.g., process minerals). However, there are companies that are supplied by other companies from the same sector, such as assembly-line companies. If a product’s demand decreased, it would cause a domino effect on other product’s demand (e.g., construction).

Tertiary activity: It provides all the services that industry and consumers demand, with the aim to satisfy directly consumer’s needs.

Classification by Size

Turnover, capital employed, number... Continue reading "Understanding Different Types of Businesses" »

Entry Modes:

Exporting: Common first step for many manufacturing firms. Later, firms may switch to another mode.

Advantages:

• Avoids the costs of establishing local manufacturing operations
• Learning

Turnkey projects: The contractor handles every detail of the project for a foreign client, including the training of operating personnel.

Advantages:

• A way of earning economic returns from the know-how required to assemble and run a technologically complex process
• Less risky compared to FDI

Disadvantages:

• No long-term interest in the foreign country
• If the firm's process technology is a source of competitive advantage, then selling this technology through a turnkey project is also selling competitive advantage to potential and/or actual competitors

Licensing:

Limitations of Quantitative Easing and Nonconventional Monetary Policy

Zero Lower Bound and Deflation

While quantitative easing (QE) and other nonconventional policies can be employed when short-term interest rates reach the zero lower bound, they are not a cure-all. When the economy faces deflationary conditions, designing effective policies becomes challenging due to the increased uncertainty surrounding their outcomes. Additionally, nonconventional policies like QE are more complex to implement, making it harder to effectively stimulate the economy.

Reserve Demand and Federal Funds Rate

If the actual demand for reserves exceeds the estimated demand, the actual reserve demand curve will shift to the right. If the gap is significant, the demand... Continue reading "Understanding the Limitations of Quantitative Easing and Nonconventional Monetary Policy" »