Wealth Housing Market Comparing Wealth Effects: The Housing Market versus the Stock Market Introduction Both economics and common sense would teach us that the value of household wealth should be related to consumer spending. Early academic work by Frank Modigliani (1963) suggested that a dollar increase in financial wealth (holding all other variables constant) would lead to an increase in consumer spending of 3-5 cents. This link between stock market wealth and consumption had been widely a...
Introduction Microeconomics is the study of the behavior and an individual form of economy. The examples of individual form are consumer, household or firm. The main concerns of microeconomics are the factors that give impact on the individual economic choices, how these factors effects the decision maker, how markets coordinate their choices and how to determine the prices and demand in market. Monopoly is a large firm with an only one seller that provides no substitution in the market. The ...
Lecturer LingLee gave us reference materials,conducted group discussion,presentation and remind importance of attitude and teamwork along with learning process.ITB assignment asked for compare small firm,large firm and multinational corporation,why small firms are lack of competitive advantage of economies of scale,then how small firm survive despite compete against large firm.Small firms have potential benefits such provide opportunity for new business trial of limited budget and liability,t...
Between 1975 and 1995, real single-family house prices in America grew every year with an of 0,5 percent, equal to 10 percent over that 20 years. From 1995 to 2004, the national real house prices increased with 3.6 percent per year on every, a more than seven-fold increase in the annual rate of real appreciation, equal to a total of nearly 40 percent in ten years. There are several causes for this. There are several causes for this strong upsweep in the United States housing market. After 9/1...
In this section, two theories have been selected according to their usefulness in explaining what characterizes multinational firms. In this respect, sub-section 2.1.1 is devoted to the OLI eclectic paradigm and sub-section 2.1.2 to firm heterogeneity. 2.1.1 OLI eclectic paradigm A common theoretical framework aiming at explaining the decision of serving a foreign market via foreign direct investment is the OLI eclectic paradigm developed by John H. Dunning in 1977. This theory has brought an...
The Market System can be defined as any systemic method enabling many markets to bid and ask, helping buyers and sellers interact and make deals. It is an economic system that relies upon markets to allocate resources and determine prices. Markets alone are used to allocate scarce resources of land, labour and capital. In solving the problem of scarcity three questions are always asked, what to produce, how to produce it and for whom to produce. Scarcity occurs because consumers have an unlim...
The first theory of specialisation and gains from trade was introduced by Adam Smith to explain the underpinnings of international trade. He called it the theory of absolute advantage. According to this theory, a country should specialize in the good in which it has an absolute advantage. Then, it will gain by exporting that good and importing others. His theory was extended by David Ricardo (1817) who brought the theory of comparative advantage. Here, a country can have an absolute advantage...
An 'Economy' can be defined as the 'Activities related to the production and distribution of goods and services in a particular geographical region' (InvestorWords.com). A mixed economy, thus, is an economic system that has the participation of both the public and the private sectors. These two sectors are interlinked through market operations (Peddle, p8). Is the intervention in the mixed economy desirable? Through their experience of economic history of the world, economists have come to th...
Last August, some friends of mine and I went to Turin to watch a U2 concert, and while we were queuing, a group of volunteers were talking to the people and raising awareness about ONE, an organisation cofounded by Bono, frontman to the famous band U2, and other campaigners, and which is a grassroots advocacy and campaigning organization by pressuring political leaders to support smart and effective policies and programs that will help save lives, help put kids in school and improve futures, ...
Background The theoretical underpinning for the study of money demand and PPP is standard. The simplest form of the PPP theory suggests that goods market arbitrage enforces parity in national price levels. Hence, converted to a common currency, national price levels should be equal. Law of One Price The foundation of purchasing power parity is grounded in the law of one price. The theory states that barring frictional or complicating factors such as tariffs, taxes, and transportation costs, t...
