Economic Health Memo EOC/212 May 9, 2011 Economic Memo Gross Domestic Product is the official measure used in the United States to measure the total output of goods and services within the United States economy. The GDP measures the output off all labor and capital within the United States. This “data is collected monthly, quarterly and annually by government agencies, companies and firms and then compiled into hundreds of statistics” (Anderson, para. 2-7). These statistics include the “consumer price index (CPI), the employment report, and summaries of corporate and individual tax returns” (Anderson para.
For income property, the process is similar to the sales comparison approach using the gross rent multiplier or the cash flow analysis for capitalization. The gross rent multiplier approach was described in previous paragraphs. The capitalization approach however is divided into two types; direct and yield. For direct capitalization, an appraiser must first calculate the net operating income by estimating the rent revenues less the operating expenses. Then the net operating income is converted to an estimated value for the property.
Explain how changes in the price level in the UK are measured through the use of price indices such as the RPI and CPI. (15 marks) In the UK the change in price level is measured now through the CPI or the consumer price index, which is a weighted price index that measures the monthly change in the prices of a basket of around 600 goods and services. The weighting and the goods included in the basket are determined through the family expenditure survey each year, although the expenditure of high-income households and pensioners are excluded from the survey, which attempts to look at the expenditure of the ‘average family’. The weighting of different goods within the CPI reflects the spending patterns of the average family, for example food may be weighted higher then lawnmowers as food takes up more of a families budget and is seen as more important, because of this some goods have a larger impact on CPI then their actual change because of the weighting. When a good is deemed no longer a significant part of the spending of an average family it is removed from the survey and new ones are added, for example recently craft beer and headphones where added to the basket whilst sat navs and yoghurt drinks where removed from the basket.
The second ratio measures the effect of interest; it indicates the proportion of earnings before interest and tax that is retained after paying interest. It should be considered together with the leverage component (assets/equity). The third ratio measures the company’s operating profit on sales; it can be broken down into subcomponents such as gross profit margin. Common-sized income statements can help with
Accounting addresses several ways a business may classify an expenditure and depreciation over time. Government makes their own rules or change existing rules to fit their needs. Structural, passive, nominal, deficits, and surpluses are ways of defining the economy based either on government actions designed to run a deficit, surplus, or other external factors adjusted for inflation or not (Colander, 2010, pp. 407-410). Our text states “Deficits are summary measures of the state of the economy.
Profit margins are found by dividing net income by net sales. Huffing Trucking’s return on assets was 2.2%. This was calculated by dividing net income by the average assets and gives a general measurement
The various adjustments that are made to net income in arriving at net cash flow from operating activities. 10. The different tools of financial statement analysis, and how each tool is used, as well as the different names for certain tools of analysis. 11. The different ratios, why/how those ratios are used, and which external user is interested in a certain ratio.
They then develop calculations to categorize these consumer patterns, and then use them as tools to provide insight into consumer reactions and possible future buying patterns. One of these tools is called the Price Elasticity of Demand. The Price Elasticity of Demand measures how consumer demand changes as a result of changes in price and it is represented as a coefficient. Elasticity is the main aspect of this coefficient and it represents how responsive or elastic consumers are to price fluctuations. This coefficient is calculated by dividing the change in demand by the original demand, and subsequently dividing that total by the change in price divided by the original price and the final
Federal Reserve ECO 212 Federal Reserve Currency is the main focal point in the United States economy as well as any country in the world. The value of currency changes as the business cycle changes and the economy fluctuates. The Federal Reserve is the central bank of the United States and is in charge of all the monetary supply and the policies that have to do with money. There are many choices that the Federal Reserve makes. The choices they make have an affect the employment levels and the production of the economy.
1. What are the essential differences between endowments, final-salary definedbenefit (DB) pensions plans, and cash-balance (CB) pension plans? A Cash Balance plan is a defined benefit plan that specifies both the contribution to be counted to each participant and the investment earnings to be counted based on those contributions. Each participant has an account that resembles those in a 401(k) or profit sharing plan. They are based on two ways: 1) The company contribution – a percentage of pay or a flat dollar amount – determined by a specified formula 2) An annual interest credit.