But Dr. Roberts explains the benefits and costs of free markets and trade in a clear and cogent manner again and again in various scenarios. Of particular value are the treatments of the concepts of 'fair-trade' and so-called trade deficits. These two issues are some of the most divisive and controversial parts of the trade debate. As expected, Dr. Roberts explains the facts in a way that just about anyone can understand. Dr. Roberts also illustrates how we use what he calls the roundabout way to wealth to explain how we get richer when we specialize and trade.
Throughput is the rate at which the system generates money through sales while inventory is all the money that the system has invested in purchasing things which it intends to sell. And operational expense is all the money the system spends in order to turn inventory into throughput. In traditional meaning, throughput is defined as the rate at which the system generates money through production whereas inventory includes the direct labour cost invested on the products and operational expense is all the money the system spends in order to turn inventory into throughout. I found the new definition is useful because it eliminates the confusion over whether the money spent is an investment or an expense . 2.
The four fundamental factors that affect the cost of money are production opportunities, time preferences for consumption, risk, and expected inflation. k. What are some economic conditions (including international aspects) that affect the cost of money? Some economic conditions are budgets deficits, federal reserve policies, budget surpluses, level of business activity and international trade deficits or surpluses. The international aspects are country risk and exchange rate
The terms active income and earned income are often used interchangeably. For this to be active involvement the activity must be heavily used with the explicit purpose of gaining income. Passive Income -This is income earned through a trade or investment in which the individual does not spend much time or effort. If this is the regular employment of the individual for which we are directly compensated it would be active income. Portfolio Income -This type of income is derived directly from investments such as stock Earnings, mutual fund investments, or interest income.
Finally, we have seen how these incentives affect different types of organizations. We have seen cases where companies move for reasons that other may consider small like consultation, or travel. While others move because of additional material benefits, such as lower labor, and shipping costs. Because of the importance of this decision an organization should study the different types of incentives and chose the most beneficial to their
The balance sheet connects to income statements, in turn also connected to cash flow statement. Occurrences or a change to the net cash activities of the cash flow statement affects the balance sheet. The balance sheet is useful when estimating the potential of the organization in order for them to achieve there long-term mission. However, cash flow statement displays the exchange of currency among an organization and external agents. For example, the cash flow can be affected when the company purchases products, and if the costs of the products are an outstanding amount in turn it will affect the assets on the balance sheet.
Price Gouging is not Wrong Supporters of price gouging are of the notion that it saves life despite the increase in prices. In their arguments, they stated that in most cases sellers are taken advantage of by customers, so there is no harm in reciprocating it during times of disaster. Price gouging is not wrong in that, both the trader and the customer benefit from the trade. In a market that is unrestricted, there is a mesh between the vendor who is responsible for supplying goods that are needed urgently and the buyer who needs these goods urgently. There are price mechanism in every market that ensures a quick response from economic factors once any dramatic change is noticed in the demand and supply of commodities or goods (Snyder, p. 187).
The cornerstone of this section, and in many ways the course, is Carl Menger’s theory of the origin of money. Menger argues that money arose as an unintended consequence of barter exchange, rather than as the conscious product of human design. The use of money in exchange has enabled us to form money prices and dramatically increase the productivity and complexity of the economy. Money prices play an important role in economic coordination, and Hayek’s paper explicates this role more
Although paper monies, such as certificates, stocks, currency, or bonds, are normally kept in financial institutions because of safety or convenience, the popularity to maintain possession of valuables is on the rise. The lack of hassle and ease of liquidity are two reasons for the rise. Standard of Deferred Payment - Money can be used to purchase goods and services, and pay at a later date or with a series of payments. For example, some furniture or electronic stores offer “buy now, pay later” specials as an incentive for purchasing. Federal Reserve and Monetary Policy The Federal Reserve is considered independent because, although it is accountable to Congress, its decisions do not have to be ratified by Congress or the President.
Explain the meaning of money multiplier and its role? (6) The money multiplier calculates the maximum amount of money that an initial deposit can be expanded to with a given reserve ratio. Money multiplier can also be expressed as a ratio of a change in money supply divided by a change in money base. The role of the multiplier is that it explains why output fluctuates.the money multiplier is a multiple of reserves; this multiple is the reciprocal of the reserve ratio, and it is an economic multiplier.In monetary economics, a money multiplier is one of various closely related ratios of commercial bank money to central bank money under a fractional-reserve banking system. Most often, it measures the maximum amount of commercial bank money that can be created by a given unit of central bank money.