Purchasing Power Parity (PPP) is also not taken into account with income per capita; this means that the cost of living in each country is not accounted for so development may appear better in some countries than it actually is. Income per capita can be used to measure the economic and social development, but not any of the other factors of development, such as environmental development. Development can be further measured by income inequality. This can be a useful measurement as it shows the differences between the rich and poor. The greater the inequality, gap between the rich and poor, the worse developed the country is.
When the government prevents prices from adjusting naturally to supply and demand, efficiency is improved in the economy. ANSWER: F TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxviii]. A market economy cannot possibly produce a socially desirable outcome because individuals are motivated by their own selfish interests. ANSWER: F TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxix]. While the invisible hand cannot guarantee efficiency, it is better at guaranteeing equity.
The long-term provision of large quantities of food may force down domestic prices and make matters worse for domestic farmers. It could be considered better for farmers to have a reduction in the subsidies given to farmers in the developed countries. 6. Continued dependency on aid means there is little incentive to be innovative and people develop a welfare mentality. 7.
With reference to extract one, assess the likely effect of a fall in the sterling exchange rate on the UK’s deficit in the trade of goods and services. (12 marks) A fall in the exchange rate of 25% means the pound becomes weaker, this means imports are more expensive, and exports are cheaper. As a result of this, this may mean a large increase in demand for exports and a considerable decrease in demand for imports, therefore decreasing the deficit of the balance of payments in the UK as predicted. However, if the goods we are importing and exporting are inelastic, meaning they have a less than proportional response to price, an increase in the price of imports, and a decrease in the price of exports may not have a great effect on the trade of goods and services and so therefore not improve on the deficit the UK holds. As stated in extract 1, it tells us that the goods we import are not made in the UK and so makes it impossible to replace the imports, therefore meaning that we still have to import goods, despite the high prices due to the low exchange rate of sterling.
Protectionism endanger a consumer’s right to choose from a wide variety of goods and services. The defense argument is that it protects higher prices, lower quality goods, economic stagnation and among other things. It is a form of purism when it comes to the trade barriers being in place. It is defended that is in place because consumers to purchasing foreign made products will cause unemployment here in America. The theory is that jobs are lost when we are tempted by cheap foreign goods.
Heather Moorehead M4 – Written Assignment 1.) Export capital for production abroad The exporting of capital for production would not be supported by a utilitarian and would be found to be unethical. A utilitarian would argue that by allowing our capital to be produced abroad we would be hurting ourselves domestically by giving up potential jobs to workers internationally and by limiting domestic usage. In today’s economy a company can set up production plants in virtually any country they want, and most tend to go where the cost of labor is least expensive. A utilitarian’s goal is to determine how to obtain “the greatest possible balance of good over bad for everyone effected by our actions” (Shaw & Barry, 2013).
The Fordney McCumber Tariff of 1922 was a law introduced in the United States with the purpose to protect American farms and factories from foreign exports. The tariff however only made the situation that farmers were already facing worse. The tariffs meant that foreign exports to the United States were extremely expensive and therefore if Americans opted not to buy foreign goods the Foreigners would make less money from their foreign exports and therefore have less money to spend on U.S food. The result of this was a severe agricultural crisis faced by farmers across the American
Entities such as the Group of Seven, or the G7, and the World Trade Organization, have created programs to lessen the gap between the wealthiest and poorest areas of the world. It has failed to progress the poorer nations of the world economically when “the leaders of the industrial world do make the rules, a power that is exercised in part to ensure the continuing wealth and power of the industrialized world.” (Marks, pg. 44) This hierarchical effect of the wealthy determining the economic fates of the poor has had little effectiveness in narrowing the gap between the haves and the have-nots. Instead, the developing countries are creating several treaties and alliances such as the North American Treaty Organization exclude entrance by the under-developed nations. This further expands the reign and monopoly of the western world by excluding influence from the economic weak.
When there is a larger demand for more expensive commodities, the demand for money increases and the cost to borrow follows. This is following the theory of money demand. (Sparknotes, 2013) It is true for a decrease in output. The fewer consumers are willing to buy, the lower the demand of money is creating lower interest rates. This can be seen in the housing market.
Research by economists David Neumark of the University of California, Irvine, William Wascher of the Federal Reserve Board, and Mark Schweitzer of the Cleveland Fed shows that that minimum wages increase poverty; therefore poverty reduction certainly shouldn’t be expected as a benefit of raising the minimum wage (qtd. in the National Review). One of the economists mentioned above, David Neumark states, “The principal sources of an individual’s higher earnings are more schooling and the accumulation of experience and skills in the labor market,” both of which are discouraged by increases in the minimum wage. Neumark, further simplifies this thought in the