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2008 Economic Crisis
A sub-category dedicated to the economic crisis that has affected us all
810 Questions
Advantages and disadvantages of government using fiscal or monetary policy?
1.Capital formation: Fiscal policy has played a very important role in raising the rate of capital in country-in private as well as public sector. A major part of budgetary resources has been invested in Public Sector enterprises which have resulted in increase in gross domestic capital formation as percent of GDP from 10.2 percent in 1950-51 to 22.9 in 1997-98 and to 23.7 percent in 2001-02.
2. Resource Mobilisation: - Fiscal policy has helped to mobilize resources through taxes, savings, public debt etc. for economic development of the country. Resources mobilisation which was 70% in 1965-66 has increased to 90% in 2001-2002.
3. Incentives to Private Sector: - Private sector has been encouraged under fiscal policy for investment and production. Tax concessions, such subsidies exemptions in taxes have been given as incentives to private sector units set up in backward areas and expert oriented units. Similarly subsidies and tax concessions have also been given to encourage imports and as a result it has affected exports and imports of the country.
4. Encourage Savings: - Various incentives have been given to raise the rate of savings in household and corporate sector. To encourage savings in household sector various concessions and tax benefits have been given on fixed deposits, life insurance schemes, Kisan Vikas Patras (KVPs), National Saving Certificates (NSCs), provident funds etc. savings have been encourage in corporate sector by offering them tax concessions and tax exemptions.
5. Poverty alleviation and Employment Generation: -To fulfill one of its major objectives of providing full employment, allocation of huge amount has been made in fiscal policy to eradicate poverty and generate employment. For this a huge amount has been spent on different schemes like twenty point programme, Integrated Rural Development Programme (IRDP), Jawahar Rpzgar Yojana (JRY) etc.
6. Reduction in Inequality of Income and Wealth: -Fiscal Policy of the country has been making constant endeavour to reduce inequality of income and wealth. Resources have been mobilized from rich class to poor by way of progressive taxes, wealth tax, corporation tax and capital gain tax etc. and this money has been utlised for the welfare of poor people.
7. Export Promotion: - Export has been encouraged by way of providing subsidies, concessions, tax exemptions, cash subsidies etc. Exports have shown a rise from 4.5 percent in 1960-61 to 23.4 percent in 2001-2002. Import duty on raw material and capital goods used for production of goods meant for export has also reduced with a view to encourage exports.
Read more: Advantages_of_fiscal_policy
How do consumerism and environmentalism affect marketing strategies?
Consumerism is the emphasis on buying goods, and while it has always been a component of American society, consumerism became a much more significant force following World War II. Marketers spent more resources targeting specific groups of consumers (for example, women), and marketing campaigns focused on both utility and style, as opposed to simple utility (the functionality of a product or service). Environmentalism, which seeks to limit pollution and protect the natural environment, affected marketing by preventing some products from being marketed traditionally (for example, cigarettes). Some marketing strategies focus on the production process, highlighting the advantages of certain environmentally friendly products in a way that will appeal to consumers.
Possible reasons for variations in elasticity?
Elastic goods are goods where a change in price leads to a change in the quantity demanded. Examples of this would be clothes. If Store X raised their prices, the public would substitute and buy clothes from Store Y instead.
Inelastic goods are where a change in the price does not lead to a significant change in the quantity demanded. A good example of this would be medicine. Even if a pharmaceutical company increases their prices, their customers STILL need their medication, so they will still purchase it at the higher price.
A change in elasticity can arise from the market for certain products expanding. A good can become more elastic if more substitute goods are introduced to the market. On the other hand, a good can become more inelastic if substitute goods are taken off the market.
What are the benefits of the housing crisis?
One of the main benefits is that we are addressing some of the faults in our banking system - where investors are allowed to gamble with people's money. If the gamble pays off, they get huge bonuses. If it doesn't, our money is gone. We are now paying the price.
Bankers are still getting huge bonuses now, and the rioting that we see in Greece and France is not just a flash in the pan. People are angry that the system has let them down. Governments have let them down. Bill Clinton brought in a lot of the laws that allowed banks to take more risks. But it's not his fault - he is merely a pawn in the game as it was the large banks and corporations through their millions in donations and through their thousands of lobbyists in Washington that control the country.
All this gets exposed in the current housing and banking crisis. And it makes us think about what is really going on.
What are the advantages and disadvantages of government involvement in business activities?
The advantages of government involvement in business activities is that it helps regulate the prices of commodities as well as ensure only quality products are in the market. The disadvantages include interference with the business activities and levying high taxes among others.
What is included when calculating a country's balance of payments?
Balance of payments (BoP) accounts are an accounting record of all monetary transactions between a country and the rest of the world. They include payments for the country's exports and imports of goods, services, financial capital, and financial transfers.
None of the following is included.
What are the key influences in your daily economic decisions?
scarcity is basically the main thing that influences peoples decisions daily
What are the names of the two banks in the US which caused the recession?
Lehman Brothers
Naresh Singhmar
Is inflation always bad for economy?
Inflation is certainly not always bad for economy, in fact a moderate level of inflation matching to it's growth rate is good for the country. Moderate inflation suggest demand in the system while no inflation or deflation suggest demand collapse which is much more dangerous than Inflation.
For Instance US inflation is 1.5 to 2% while it's growth is 2-3%. This equation is ok. A Country having an inflation equal to it's growth rate is not bad though it is always preffered to have lower inflation and high growth rate. But it is difficult to achieve on a continuous basis.
Reserve banks all over the world prefer and try hard to have moderate inflation and would worry if there is a situation of deflation. But too high inflation will make the currency of the country very weak against the major global currencies and will bring the economy to it's knees, like what happened in case of Zimbabwe.
A bank rate is the rate at which a central bank charges interest when it lends money to another bank.
Since resources are limited,the society cannot get all the goods and services the people want.And hence some mechanisms are used to guide the use of resources in the production of goods and services to satisfy as many as people wants as possible.
When the society do not know what to produce,the Production Possibility Frontier [PPF] is used to represent a boundary between those combination of goods and services which can be produced and those which cannot be produced.
Why does marginal utility decrease?
Law of diminishing marginal utility states that equal additions to a good provide smaller and smaller increases in total utility, therefore marginal utility decreases. Lets use apples for an example. The first apple is very satisfying and adds a lot of utility, say 100 total utility. If you have a second apple, it is less satisfying, and adds 80 to make 180 total utility. A third apple adds only 50 utility, to make 230 total. Total utility is increasing at a decreasing rate. Therefore, the marginal utility (satisfaction) between each apple is decreasing, which illustrates the law of diminishing marginal utility.
social diversity is the diverse factors surrounding our society such as race, culture, religion, age and disabilities.
There are two types of GDP.such as 1)Potential GDP,2) Nominal GDP
How was jg wentworth affected by the financial crisis of 2009?
During the financial downturn two years ago the firm formally known as JGW Holdco LLC and two of its subsidiaries, J.G. Wentworth LLC and J.G. Wentworth Inc., entered Chapter 11 bankruptcy protection after the company encountered liquidity problems in the midst of a tightening credit market. They laid off 120 of its 200 employees and closed its office in Las Vegas. But less than six months later they got a 100 million dollar investment and they were able to get rehire and rebuild again.
Why price effect equals subsitution effect plus income effect?
A substitution effect only considers the change in the relative prices, this means that when one good becomes more expensive, holding everything else constant, to what degree will a person switch to the cheaper good. the substitution effect holds utility constant, in order to measure this, but utility can not stay constant because the price of one good goes up, this brings about a drop (in this case) in real income, with the drop in real income (able to purchase less because of higher price) the income effect comes into play. How much better or worse off will you be given the change in price. Substitution effect only takes into account the change in goods, keeping you as well off as you were before.
What were the negative and positive effects of Asian development bank?
The Asian Development Bank has had both positive and negative effects. On the positive side, it has provided significant financial assistance for development projects in the region, promoting economic growth, poverty reduction, and infrastructure development. However, some criticisms include a focus on large-scale projects that may have negative environmental and social impacts, as well as concerns about governance and transparency in the allocation and use of funds.
opportunity cost of saving is when you save money then economically spend from your saving this may vary to what person you are
Hard money advocates (like bankers) wanted a stable currency that was not subject to inflation.Investors, speculators,&people who tended to be in debt favored a loose or soft money policy, because inflation tended to ease their financial burdens.
