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

Understanding Terms of Trade (TOT)

TOT Definition and Calculation

The Terms of Trade (TOT) is an economic indicator that measures the relative prices of a country's exports in relation to its imports. It quantifies the amount of imports a country can obtain per unit of its exports.

The formula for calculating TOT is:

TOT = (Average Price Index of Exports / Average Price Index of Imports) x 100

Interpreting Changes in Terms of Trade

Changes in the TOT indicate shifts in a country's purchasing power in international trade:

• TOT Improves / More Favorable: This occurs when export prices rise relatively to import prices. The country is then able to exchange the same amount of exports for a greater quantity of imports. This generally signifies an increase

1. Net Income

The net income is rising from 2015 to 2017, which is good. However, net income as a percent of sales rises from 2015-2016, but falls from 2016-2017. Why?

2. Total Revenue

Total revenue is increasing each year from 2015 to 2017, which is good. On a percentage basis revenue increased by 27% from 2015-2016 and accelerated to 31% in 2016-2017, which is very good.

3. Cost of Revenue

Cost of revenue is going up from 2015 to 2017, which is to be expected because revenue is going up. On a percent of sales basis, cost of revenue is going down each year from 67% to 62%, which is very good.

4. Gross Profit

Gross profit is rising over time from 2015 to 2017 which is good. As a percent of sales it is getting better over time, which we expected because... Continue reading "Financial Analysis: Trends and Concerns" »

1929 Crisis: Stock Market Crash

1. The Booming Twenties

• After WW1, a period of peace emerged.
• Countries experienced economic growth.
• The League of Nations aimed to prevent wars.
• The Dawes and Young Plans aided Germany's economic recovery and reintegration into the League of Nations.
• The US provided financial assistance to Europe for post-war recovery.

The US appeared prosperous with high production, wages, and cheap labor. However, many lived in poverty. European countries imposed tariffs on US imports to protect domestic products. Overconfidence led US citizens to borrow money to buy shares, despite low share prices. European countries grew wary of the US.

Germany borrowed heavily for post-war reconstruction, but it wasn't enough. France occupied... Continue reading "1929 Stock Market Crash: Causes and Effects" »

Tax Deductions for Business Operations

You can write off operational expenses from your taxes for the year in which they occur. This means you can deduct 100 percent of your daily expenses each year.

Operational Expenses vs. Capital Expenditures

• Operational Expenses (Write-offs): Offer the most advantageous tax deductions for the short term, allowing a 100% deduction in the year incurred.
• Capital Expenditures (Depreciation): Must be depreciated. This means you can deduct only a part of the cost of the asset each year over the life of the asset.

Understanding Risk Aversion

Risk Averse: Investing conservatively, avoiding risk unless there is adequate compensation.

Standard Deviation and Investment Volatility

Standard Deviation is applied to the annual... Continue reading "Investment Metrics, Market Structures, and Tax Deductions" »

Types of Primary Research Methods

Questionnaires

A questionnaire is a set of questions used to collect data for market research.

Advantages:

• Detailed qualitative information can be gathered.
• Customer opinions can be obtained.
• They can be carried out online.
• Vouchers can be offered to encourage participation.

Disadvantages:

• Inaccurate answers may result from poorly designed questions.
• Can be time-consuming and expensive.
• Collating and analyzing answers is time-consuming.

Online Surveys

Online surveys require the target sample to answer questions over the internet.

Advantages:

• Quicker response times.
• Cheaper than interviews or postal questionnaires.
• Easy for participants to complete.
• Data can be quickly analyzed using IT tools.

Disadvantages:

• Lack of an interviewer

PROFORMA INVOICE

It is a document without taxes value, the seller provides it to the buyer, contains most of the necessary information about an international operation. If the buyer accepts, it is understood that the buyer accepts and confirms the information indicated on it.

Freight Transportation Fundamentals

Importance of an Effective Transportation System

• Greater competition
• Economic Scale
• Reduced price

Service Choices and Their Characteristics

• Price
• Transit time and variability
• Loss and damage

Transportation Rate Profile

1. Volume related rates
2. Distance-related rates
   • Uniform rates
   • Proportional rates
   • Tapering rates
   • Blanket rates: meet the rates of competitors
3. Demand-related rates: Transportation rate is set by competitor

Transportation Charges

• Line-haul rate
  • By products
  • By shipment size
  • By route
  • Miscellaneous rates
• Special service

Line-Haul Rates

1. By products
   • Classification system was devised (T 6.4)
   • Class rates: once a product has a freight classification, line-haul charges can be determined. Zip codes are used for the location (T 6.5)
   • Break

What is Economic Growth?

Economic growth refers to the increase in the production of goods and services within an economy, typically measured over a long period, such as a year. It is expressed as a percentage increase in the real gross domestic product (GDP), which accounts for inflation.

Calculating GDP

There are two primary methods for measuring an economy's total production:

1. Expenditure Approach: This method sums up all spending on goods and services by households, businesses, governments, and foreign entities. The formula is GDP = C (consumer spending) + I (investment spending) + G (government spending) + (X - M) (net exports).
2. Income Approach: This method calculates the total income earned by all households within a nation.

The Expenditure

Strategic Approach to International Marketing

Internacionalizacija i globalizacija međunarodnih tržišta i konkurencija, Brz tehnološki razvoj, Skraćenje životnog ciklusa proizvoda, Sve teže ofržavanje konkurentske prednosti, Ekonomske integracije stranih tržišta, Višak punude nadpotražnjom > povećana moć kupaca i potrošača, Trgovci smanjuju broj dobavljača

Macroeconomic Environment

Ekonomski sustav, BDP, Stanovništvo i prihodi, Koncepcija ekonomskog napretka, Struktura potošnje infrasturuktura ostali pokazatelji

Hofstede

Hijerarhijska distanca, Individualizam i kolektivizam, Ženstvenost i muževnost, Izbjegavanje nesigurnosti, Kratkoročna i dugoročna orijentacija

Political Risk

Rizik opće nestabilnosti, neizvjesnost budućih... Continue reading "International Marketing and Macroeconomic Environment" »