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

Growth and Productivity Formulas

• AGR: [(X_t/X_t-1) - 1] x 100
• PGR: [(X_t/X_o) - 1] x 100
• AACGR: [(X_t/X_o)^1/n - 1] x 100
• Growth Relationship: [1+(GR_a/100)] = [1+(GR_b/100)] / [1+(GR_c/100)]

Labor and GDP Metrics

• GDP per capita: GDP / People Employed x (People Employed / Population) = Labor Productivity x Employment Rate
• GDP per capita growth: [1+GR(GDP_pc)/100] = [1+GR(LabProduc)/100] x [1+GR(PEP)/100]
• GDP per capita (PPP$): GDP_pc($) / RPI x 100
• Compensation of Employees / GDP: Unit Labor Costs x Wage Earners Rate
• Unit Labor Costs: (Average Wage / Labor Productivity) x 100
• Wage Earners Rate: (Wage Earners / Total Employment) x 100

National Income and Savings

• Gross National Product (GNP): GDP + Net Income from Abroad = Consumption + GCF (I) + Net Exports + Net Income

The Role of Institutions in Economic Growth

Conditions for Beneficial Institutions

Several conditions contribute to the emergence of institutions that foster economic growth:

• Political Checks and Balances: Institutions that limit the power of political actors, such as through a balance of power, encourage the development of sound economic institutions.
• Broad Distribution of Power: When political power is dispersed among a wider group with substantial investment opportunities, the likelihood of favorable economic institutions increases.
• Limited Rent Extraction: Restricting the ability of those in power to extract excessive rents from society discourages the establishment of institutions that facilitate exploitation.

North and Thomas's Perspective

According... Continue reading "Economic Growth and Institutions: A Comprehensive Analysis" »

Global Entry Strategies

1. Exporting

Low risk, low control

Producing goods in one country and selling them in another.

2. Franchising

Low-moderate risk, low-moderate control

A contractual agreement between the firm (the franchisor) and another firm or individual (the franchisee). Allows the franchisee to operate a business using the name and business format of the franchisor.

3. Strategic Alliance

Moderate risk, moderate control

Collaborative relationships between independent firms - they do not invest in one another.

4. Joint Venture

Moderate-high risk, moderate-high control

When a firm entering a new market pools its resources with those of a local firm to form a new company in which ownership, control, and profits are shared.

5. Direct Investment

High

Consumer Society and Environmental Impact

It is often said that we live in a Consumer Society; we consider it important to buy products and services. Companies need to be aware of the impact of this on the Environment, the natural world around us.

Corporate Responsibility and Sustainability

Many companies use Packaging (boxes, bottles) which has been Recycled, that is, made using old materials. Pollution, such as smoke in the air, can be reduced if companies use trains instead of road transport.

Raising Capital: Stocks and Bonds

A company can raise money on the Stock Market or Stock Exchange (a marketplace for buying and selling shares) in two different ways:

1. Issuing Shares (US Stocks), or units of its capital, to Institutional Investors.
2. Issuing

N09/3/GEOGR/BP1/ENG/TZ0/XX

Global Population Dynamics and Health

1. Analyzing Population Trends and Health Impacts

(a) Describing Trends in Fertility and Literacy Rates

Referring to the graph, describe the trends in the two rates:

• Total female literacy rate increases over time.
• Global fertility rate decreases over time.

(Note: Responses should include specific quantification from the graph.)

(b) Reasons for Global Fertility Rate Trends

Suggest three reasons for the trend in global fertility. Reasons may include references to developed and/or developing regions, or a combination:

• Increasing emancipation of women, leading to choices for fewer children.
• Increasing educational opportunities providing career paths, thus delaying marriage or the first child.

Understanding Cost-Push Inflation

The law of diminishing marginal returns to labor suggests that increasing production often involves hiring less-skilled workers and utilizing older, less-efficient equipment, which contributes to increasing marginal costs.

Key Drivers of Inflation

• Higher profit margins: If firms believe market conditions have improved sufficiently to increase mark-ups, the economy may experience profit-push inflation.
• Wage inflation: Every increase in money-wage rates not offset by productivity improvements will raise unit labor costs.

Defining Cost-Push Inflation

Cost-push inflation, also called supply shock inflation, is caused by a drop in aggregate supply (potential output). This may be due to natural disasters or increased prices... Continue reading "Understanding Cost-Push Inflation and Economic Drivers" »

Understanding Insurance Risk

Risk is involved in any situation in which some kind of loss or misfortune is possible. These can include:

• Financial: Loss of savings due to catastrophe.
• Physical: Health, welfare, or inability to secure income.
• Material: Home, vehicle, or property.

What is Insurance?

Insurance: Provides compensation for loss and spreads the cost of sharing risk.

When to Purchase Insurance

Purchase insurance when the probability of loss is small but the cost of loss is devastating. For example, restaurants typically don't insure plates because the loss is small, whereas Florida houses are often not insured due to the high probability of hurricanes.

Key Insurance Terminology

Premiums: Periodic payments for an insurance policy.

Insurance Policy:

Brand Awareness and Advertising Strategies

Brand Awareness: How present is your brand in the market? Is it recognized by the public?

Brand Image: What image do you project to your customers?

Brand Loyalty: Dedication to purchasing the same product or service repeatedly, now and in the future, from the same brand, regardless of a competitor's actions or changes in the environment.

Brand Stretching: When a company tries to launch products outside its core group. Example: Zara / Zara Home.

Announcement vs. Advertisement: An announcement is an act of announcing or giving notice, while an advertisement is a commercial solicitation designed to sell a commodity, service, or similar (marketing).

What Makes a Good Advertisement?

A good advertisement is:

• Clever
• Powerful
• Catchy
• Inspiring
• Uses