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

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" »

Non-Current Assets

• Intangible Assets
  • Software
  • Patents
  • Accumulated amortization of intangible assets
• Tangible Assets
  • Land and natural assets
  • Buildings
  • Technical facilities
  • Machinery
  • Equipment / tooling
  • Furniture
  • Computer technologies
  • Transport elements
  • Accumulated amortization of tangible assets
• Real Estate Investments
  • Investments in land and natural assets
  • Building investments
  • Accumulated amortization of real estate investments
• Long-Term Financial Investments
  • Long-term financial investments in equity instruments
• Long-Term Loans
  • Long-term loans from sale of fixed assets

Current Assets

• Inventories
  • Goods
  • Raw materials
  • Finished products
  • Other
• Trade Receivables
  • Clients
  • Clients with bill of exchange receivable
  • Debtors
  • Debtors with bill of exchange receivable
  • Short-term financial

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

Core Economic Concepts

Macroeconomics: The study of the economy as a whole.

Microeconomics: The study of individual parts of the economy.

Macroeconomic Objectives

The aims of a government relating to key economic performance indicators, such as:

• Economic growth
• Inflation
• Unemployment

The Economic Cycle

• Boom: The peak of the economic cycle where GDP is growing at its fastest.
• Downturn: A period in the economic cycle where GDP grows, but at a slower rate.
• Recession: A less severe form of depression.
• Depression (or Slump): The bottom of the economic cycle where GDP falls, accompanied by significant increases in unemployment.

National Income and GDP

• Economic growth: The increase in national income over time.
• GDP: An internationally recognized measure of national

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" »

1) If the economy is in recession, the CB will decrease its target for the interest rate by increasing the money supply. Another alternative is that the Gov decides to decrease taxes

2) According to the principal of monetary neutrality: In the long run the only effects of a decrease in the monetary supply is to reduce the agg price level...

3) Which of the following statements is false? According to the Solow's model, the contribution of the TFP to the GDP growth is computed as a residual, once we have subtracted the contribution physical & human capital.

4) If the nominal GDP is 1.6M, & real GD is 1.0M, the deflator is: 160

5) The nominal rate of unemployment around which the unemployment rate fluctuates is called the Natural rate of unemployment

6)