References: Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin.
References: Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin.
Yes, all terms below are correct! Christopher will get a settlement amount of $5,711.20 now from State Farm. And after successfully subrogate the at fault party, Christopher will receive another $500. The payment of $350 for the car seat is to pay for the damaged car seat; it's not part of the total loss settlement. No loss of use and rental reimbursement.…
2. A principal-agent relationships involves the owners (principals) delegating decision-making authority to managers (agents). A conflict occurs when the agents pursue acceptable levels of shareholder wealth and profit rather than a maximization of profit. They are pursuing their own self-interests. One way that the agents act in their own self-interests would be by focusing on long-term job security. This could cause the agents to limit the amount of risk taken by the firm. The firm may have an opportunity that is considered a riskier venture that could produce high profits if successful. If the venture proves to be unsuccessful, then the agent is at risk of dismissal. Therefore, the agent may avoid taking advantage of that opportunity. This may also impact decisions concerning diversification and the nature of the cash flow. The actions of the agents are impacted by their compensation package, threat of dismissal, and the threat of a takeover by new owners. In order to mitigate agency problems, agents can receive either cash compensation or long-term incentives. The issue with immediate cash compensation is that it can further promote an agent to act in his or her own self-interest. For example, agents may choose a path of diversification that will result in immediate earnings. This could inflate the quarterly earnings that are directly tied to the agents’ executive bonuses that quarter, but hurt the profitability of the company and the value of the stock in the long-run. In addition, the cash compensation could work to take away from resources that could be used in the advancement of other areas of the company in order to promote growth in the company. Long-term incentives would be a better way to reward agents in order to align their interests with the interests of the principals. These incentives include restricted or deferred stock, as well as long-term performance based payments. If an agent owned…
This pack of ECO 372 Week 4 Discussion Questions shows the solutions to the following problems:…
Exports and imports are what encompass international trade balance. When there are more exports over imports a trade surplus happens and when there are more imports over exports a trade deficit happens. A country will acquire large quantities of foreign assets when it runs in a trade surplus so it can lend internationally to other countries. A country sells of its assets to other countries and becomes a big debtor nation when it runs on a trade deficit. A country will suffer economically when it decides to borrow more than it lends in other foreign countries. As a result of the expanded trade deficit, the value of the dollar will decline. According to Colander, "we pay for a trade deficit by selling off U.S. assets to foreigners—by selling U.S. companies, factories, land, and buildings to foreigners, or selling them financial assets such as U.S. dollars, stocks, and bonds" (Colander, 2010, p. 505), This being the case, in order to avoid the possible problems of a trade deficit the United States will have to produce more than it will consume.…
International trade is essentially when two or more countries exchange goods and services. Many countries export their goods and services to other countries and in turn, they can also import goods and services from other countries to into their own. Advancements with technology have made it a lot easier for international trade to take place. Communication between countries is a good example. Communicating has vastly improved and helped to simplify the trading process. Some technologically advanced countries, like Japan and China have bountiful natural resources and that has a heavy impact on us. The United States is one of the largest contributors to international trade. Our GDP (Gross Domestic Product), is greatly impacted due to being huge import consumers. The United States relies heavily on products from other countries and we import much more than we export. Not only does this impact our GDP by lowering it as we import more than export, is also has an impact on our domestic markets because we are buying more from other countries.…
So, as prices decrease, the investment spending portion of total spending increases. Net exports, the value of exported goods and services minus the value of imported goods and services, increases as a result of a lower price level. Again, because of the law of demand, as prices decrease, foreign consumers of our goods and services buy more. The amount spent on imports is relatively unaffected by an decrease in prices because while lower prices leave us with more disposable income to spend on imports, some consumers will use that leftover income to purchase domestic goods/services that they perceive as superior to foreign goods/services.…
To analyze the influence of the deficit, surplus, and debt on the health of the United States macroeconomy you have to understand what exactly is deficit and surplus. A deficit is a shortfall of revenues are under payments, and a surplus is the excess of revenues are over payments. The influence of surplus and deficit on the economy differs in the short-term framework and the long-term framework. In a short-term framework the view of deficits and surplus certainly depends on the current state of the U.S. economy relative to the economy potential output. In a long-term framework surpluses are good they provide additional savings for the economy. In a long-term framework deficits are view as bad because they reduce growth, income, and savings, but if the U.S. economy is operating below the potential its deficits is view as good for the economy. This is because deficits increase expenditures increasing the economy output closer to its potential.…
Colander (2010) stated “scarcity has two elements: our wants and our means of fulfilling those wants. These can be interrelated since wants are changeable and partially determined by society” (p. 5).…
When the dollar is strong then the United States can lower tariff to benefit the consumers and further spur the spending. When the dollar is weak the United States needs to protect the vulnerable economy and potential jobs by increasing the tariff. Domestic trading represents the most beneficial situation for domestic producers, as there is less competition and inflation of consumer goods becomes favorable but it is the least beneficial to domestic consumers, the world economy, as consumers will buy less due to inflated prices. Free international trade circulates world economies through broad trade between nations and spurs competition for goods and services between businesses which contributes to fair prices and better made products and encourages the consumer to spend…
Supply and Demand is perhaps one of the most fundamental concepts of economics. It is the backbone of a market economy. A market is defined as a group of consumers (demand) and producers (supply) of a particular product. Competitive markets are markets with many consumers and producers, so that each has very small influence on the price of that product. Supply and demand act as an economic model to show how consumers and producers interact in a competitive market. The market price of a product is determined by both the supply and demand for it. Demand refers to how much of a product is desired by consumers. Quantity demanded is the demand at a particular price, and is represented as the demand curve.( Cited http://www.basiceconomics.info/supply-and-demand.php, 14 February 2012.) Supply represents how much the producers can offer. Quantity supplied is the amount offered for sale at a particular price, and is represented as the supply curve. When demand and supply are equal, the economy is said to be in equilibrium. There may also be presence of disequilibrium between demand and supply too. There may be shifts in supply and demand too. (Cited http://www.netmba.com/econ/micro/supply-demand/ . 14 February 2012. )…
On the other hand, situations that caused the import of china fell are Euro zone debt crisis, other countries’ political issues and US unemployment rate. These situation led china have not enough raw materials from abroad to produce goods and services efficiently. Hence, shortage arises. The firms in China are forced to increase the price of goods and services in order to push down the aggregate demand.…
More imports from an economy mean increasing supply of the currency of that economy, forcing the exchange rate of that currency to go down. As a result imports may go down. This causes less supply of the currency and increasing exchange rates. Especially when the imports refers to luxury goods imports and exchange rates will fluctuate.…
The main reason for declining domestic industries if the low cost of labour in exporting companies and that the economy should be protected from imports that are produced in countries where the cost of labour is very low. Consumers have less choice. Inefficency. Exemple: demand for the clothing of the US p.286)…
Import: due to recession, prices of commodities in global market as well as volume of imports have declined. While imports shrank by 12 percent in…
Even though Markets can allocate the resources well, it did not assist to prevent the poverty. Also, it is unable to alleviate the unequal distribution of wealth because markets are favored for the ones who have assets such as houses or cars. For the ones who don’t have assets, markets prevent them from joining the trade because they don’t have the products to trade. The other important demerit of market is In contrast to the benefit of an international market, Jim Glassman noticed when the domestic market has some economic problems, it is likely to lead to destruction to the international market because all the markets are closely tied.…