unemployment

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1 The Dhaka Stock Exchange is doing well Grameenphone, the biggest mobile (cell) phone company in Bangladesh with over 21 millioncustomers, decided in 2009 that it needed more finance to develop its services. To help Generate this finance, Grameenphone announced its intention to raise US$70 million through selling additional shares. Grameenphone is a multi-national company which is owned by Telenor, a Norwegian telephone company, and Grameen Telecom, a non-profit company founded by Muhammad Yunus. Muhammad Yunus, who is a pioneer of microfinance, also founded the Grameen Bank which provides loans to people, such as village entrepreneurs, who find it difficult to obtain finance from traditional sources. The Stock Exchange in Dhaka, the capital of Bangladesh, has 284 companies listed and the value of these companies more than doubled between 2007 and 2009. The value of these companies is now equivalent to approximately 16% of Bangladesh’s Gross Domestic Product. The opportunity to buy shares in Grameenphone will further increase the value of the Dhaka Stock Exchange. The Bangladesh Government has offered financial incentives to multi-national companies to encourage more of them to locate in Bangladesh.

Answer the following

(a) Explain what is meant by an entrepreneur.

(b) Describe the role that a stock exchange can play in a country’s economy.

(c) Identify two possible reasons why the supply of mobile (cell) phones may increase.

(d) Explain two financial incentives, other than subsidies, which a government might offer multinational companies to locate in its country.

(e) Discuss whether a multi-national company which locates in a country will always be

advantageous to that economy.

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Living standards

 

7 The living standards of people vary enormously and yet it is not always easy to measure these with great accuracy. It is, however, certainly the case that some countries suffer from extreme poverty.

(a) Describe how living standards in a country can be measured.

(b) Explain two reasons why the measurement of living standards in a country is not always

accurate.

(c) Discuss the actions a government might take to reduce poverty.

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Mixed economies

Definition of 'Subsidy'

A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public. Politics play an important part in subsidization. In general, the left is more in favor of having subsidized industries, while the right feels that industry should stand on its own without public funds. subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare.

             

         

Answer this question.

2 One feature of many mixed economies is that governments may intervene by giving subsidies to some producers.

(a) What is meant by a subsidy?

(b) Explain, using a demand and supply diagram, how a subsidy can affect the equilibrium price

and equilibrium quantity in a market.

(c) Identify the three questions faced by every type of economic system.

(d) Discuss why virtually every country today has a mixed economy.

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Demand- price elasticity of demand-

   

Price elasticity of demand is the quantitive measure of consumer behavior that indicates the quantity of demand of a product or service depending on its increase or decrease in price. Price elasticity of demand can be calculated by the percent change in the quantity demanded by the percent change in price.

Price elasticity of demand is determined by the price of the item or service, availability of alternative goods, amount of time being measured, consumer income and whether the item or service is considered to be a necessity or a luxury. Price elasticity of demand (PED or E_d) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (holding constant all the other determinants of demand, such as income). It was devised by Alfred Marshall.

Price elasticities are almost always negative, although analysts tend to ignore the sign even though this can lead to ambiguity. Only goods which do not conform to the law of demand, such as Veblen and Giffen goods, have a positive PED. In general, the demand for a good is said to be inelastic (or relatively inelastic) when the PED is less than one (in absolute value): that is, changes in price have a relatively small effect on the quantity of the good demanded. The demand for a good is said to be elastic (or relatively elastic) when its PED is greater than one (in absolute value): that is, changes in price have a relatively large effect on the quantity of a good demanded. 

3 Firms are keen to know what influences consumers in their buying decisions. Publishing firms in India have researched why people buy particular magazines and have found that the price elasticity of demand for different magazines varies.

(a) Describe the factors that can affect the demand for a product.

(b) Explain what is meant by price elasticity of demand.

(c) Discuss how knowledge of the price elasticity of demand for magazines may be used by a

firm which produces and sells magazines.

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Trade union

 

Unions" redirects here. For the defunct Australian rules football club, see Unions Football Club.

"Labour union" redirects here. For the Polish political party, see Labour Union (Poland). For the Canadian political party, see Union Labour.

Labour union demonstrators surrounded by soldiers during the 1912 Lawrence textile strike in Lawrence, Massachusetts.A trade union (British English), labour union (Canadian English) or labor union (American English) is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members (rank and file members) and negotiates labour contracts (collective bargaining) with employers. The most common, but by no means only, purpose of these organisations is "maintaining or improving the conditions of their employment"This may include the negotiation of wages, work rules, complaint procedures, rules governing hiring, firing and promotion of workers, benefits, workplace safety and policies. The agreements negotiated by the union leaders are binding on the rank and file members and the employer and in some cases on other non-member workers

4 Deciding on an occupation is difficult for some individuals. There are so many factors that need to be taken into consideration. One of these is whether or not there is a trade union they can join.

(a) Describe the factors, other than possible membership of a trade union, which can affect an

individual’s choice of occupation.

(b) Is it always true that individuals are paid more as they get older?

(c) Explain the benefits that an individual may get from being a member of a trade union.

(d) Discuss whether trade unions always have a harmful effect on the wider economy.

 

5 The size of firms in the United Arab Emirates can vary enormously, from very small sole proprietor businesses to very large public limited companies.

(a) Describe the disadvantages of a sole proprietor business.

(b) Explain why a private limited company might wish to become a public limited company.

(c) Explain how firms can grow in size.

(d) Discuss whether some large firms might benefit from reducing their size.

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Inflation

   

In economics, increases in the level of prices. Inflation is generally thought of as an inordinate rise in the general level of prices. Four theories are commonly used to explain inflation. The first and oldest, the quantity theory, promoted in the 18th century by David Hume, assumes that prices will rise as the supply of money increases. Milton Friedman refined the quantity theory in the mid-20th century, arguing that the prescription for stable prices is to increase the money supply at a rate equal to that at which the economy is expanding. inflation occurs when the demand for goods and services is greater than the supply. It calls for the government to control inflation by adjusting levels of spending and taxation and by raising or lowering interest rates. A third approach is the cost-push theory. It traces inflation to a phenomenon known as the price-wage spiral, in which workers' demands for wage increases lead employers to increase prices to reflect their higher costs, thereby sowing the seeds of a further round of wage demands. A fourth approach is the structural theory, which emphasizes structural maladjustments in the economy, as when in developing countries imports tend to increase faster than exports, pushing down the international value of the developing country's currency and causing prices to rise

6 Many governments are concerned about inflation in their economies. This was, for example, a particular problem in Zimbabwe where there has been a very high rate of inflation.

(a) What is meant by inflation?

(b) Describe how a retail (consumer) price index is calculated.

(c) Explain what is meant by demand-pull inflation.

(d) Discuss whether a government should be concerned about a high rate of inflation in its

economy.