GB540 all discussions

Unit 1

Discussion Question 1 of 3

A fundamental assumption for economic analysis is that economic agents, be it an individual, a household or a firm/business, tend to make choices and select alternatives rationally. The rational economic choice (decision) implies that people are driven by the rational pursuit of self-interest, and engaged in economic decisionsto maximize this self-interest.

By rational economic choice, economists mean that people try to make the best choice they can, given the available resources at their disposals (money, time, etc.) and information.

Self-interest is when individuals make economic decisions that are in their own best interest. On the other hand, social interestis when choices are made that benefit society as a whole. Economists argue that social interest can be attained by individual decision makers acting in their own self-interest. This process is what Adam Smith called the invisible hand, which has been the foundation of the market economy.

Create an example to demonstrate how an individual or firm acting out of self-interest to maximize profits by offering goods or services in economic markets benefit consumers – even if they do not care about them. In other words, how does self-interest help achieve society’s economic goals?

What is the relationship between self-interest and social interest in the economic decision (economic choice) process? Is there a conflict between the two in the economic world?

Discussion Question 2 of 3

There are two major kinds of government interventions in markets: price controls and quantity controls. The government intervenes to regulate prices by imposing price controls, which are legal restrictions on how high or low a market price may go. Price ceiling is the maximum price sellers are allowed to charge for a good or service whereas price floor is the minimum price buyers are required to pay for a good or service.

Price and quantity controls may have adverse impacts on productive and allocative (marketing) efficiency. However, price and quantity controls are used despite their well-known problems.

Based on the reading in Chapter 3 on price ceiling and price floor, explain the impacts of the following price control measures.

What would happen to the supply and demand of Super Bowl tickets if the government mandated that no more than $20 a ticket could be charged?

What would happen if a law passed dictating that kindergarten teachers could make no less than $100,000 per year?

Unit 1: Unit 1: The Economic Way of Thinking - Discussion

Answer two of the three Discussion topics below to enter your main (initial) responses. For Discussion participation, provide two thoughtful and substantial responses to the main posts of at least two different classmates on any of the three Discussion topics for a total of four responses. Your posts for the discussions should occur on at least three different days. Please also respond to the feedback you receive from the instructor on your initial posts when appropriate. Your contributions should make it clear that you understand the assigned reading materials, and you are able to apply them to the real world economic decisions.

Topics

Discussion Question 1 of 3

Discussion Question 2 of 3

Discussion Question 3 of 3

Discussion Question 3 of 3

The concept of rational action is a frontier of economic theory. Accordingly, traditional economics holds that humans, as rational beings, make rational economic choices to maximize their economic welfare as pursuit of self-interests. Thus Economics assumes that human economic behavior reflects rational self-interest.

But some economists argue that rationality has its bounds since many human behaviors do not appear to be rational, as traditional economics assume most human behavior is rational. Economist Herbert Simon developed the concept of “bounded rationality,” which means that people are as rational as possible (seek to act in their own best interests) given their limitations. Bounded rationality is based on the premise that an individual’s rationality is limited by both his cognitive ability and the economic environment. Thus an economic agent behaves in a manner that is nearly optimal with respect to its goals as its resources will allow.

Therefore, some economists claim that bounded rationality better describes economic agent’s behaviors than optimal rationality approach. This is due to the fact that bounded rationality recognizes that it is impossible to comprehend and analyze all of the potentially relevant information in making economic choices. The only possible way of coping with the complexity of the world is to develop techniques, habits and standard operating procedures to facilitate the decision making process. The debate still goes on the issue. Do people make rational decisions in economics? What are the factors that lead to bounded rationality? What leads to irrational economic decisions?

With this in mind, pick a behavior that appears irrational to other people but has rational components for the person doing it. Then provide a thorough explanation for your classmates.

Case Study

Economist Joseph Schumpeter, who taught at Harvard from 1932 until his death in 1950, popularized the term “creative destruction” to describe the capitalist process in which entrepreneurs introduce new goods and services to economic markets that displace existing goods and services. Though this innovative process results in increased wealth and better standards of living overall, not everybody benefits equally. The opportunity cost of buying a newly available product is the use of the old one that has been given up, so those in the camp of the new, different, and desirable do very well, while those camped out with the old and no longer desirable products see their prospects decline.

Provide an example of creative destruction you have witnessed during your lifetime and describe what the benefits and costs to the economy have been. Who was enriched and whose fortunes declined?

Construct thoughtful, detailed responses to the cases contributed by at least three of your classmates

Unit 1 Assignment

All problems below are to be completed and submitted to the Unit 1 Dropbox by the end of Unit 1.

Problem #1:Using either a graph or table (Refer to pages 11-15 for help with graphs and tables) use two goods to construct a production possibilities curve. Clearly explain what a variety of different points on the curve mean. What would make the curve expand or contract? Why is efficiency lost at the extremes, as when substantially more of one good and very little of another is produced?

Problem #2 Part A:Go to the internet auction site eBay® at www.ebay.comand select the category Jewelry and Watches, followed by Loose Diamonds and Gemstones, and then Diamonds, Natural. How many natural diamonds are for sale at the moment? Note the wide array of sizes and prices of the diamonds. In what sense is there competition among the sellers in this market? How does that competition influence prices? In what sense is there competition among buyers? How does that competition influence prices?

Problem #2: Part B)Describe what would happen if an outside agency determined the prices eBay could charge.

Problem #3:Read the “LAST word” feature on markets for human organs on Pages 62–63 of your text. Next, select a social problem where free markets are not allowed to function and describe how free market features could be introduced to help alleviate the problem. As part of your answer also include a discussion of the risks of introducing market mechanisms in situations where ethical issues are present. Your answer should be approximately two pages long and in APA format.

(Note: You can write about social problems where the free markets are not allowed to function, which includes the market for a particular illegal good or service, a regulated market, etc.).

Discussion Question 1 of 3

The law of demand states that a fall in the price of a good raises the quantity demanded, and the increase in price leads to a decrease in quantity demanded. The price elasticity of demand measures the responsiveness of the quantity demanded to a change in price. Demand for a good is said to be elastic if the quantity demanded responds substantially to changes in the price, and the percentage change in quantity demanded is greater than the percentage change in price. Demand is said to be inelastic if the quantity demanded responds only slightly to changes in the price, which indicates that the percentage in price is greater than the percentage in quantity demanded.

However, the extent of responsiveness of quantity demanded to a change in price depends on the nature of a particular good or service in the market. The price elasticity of demand partly depends on the availability of close substitutes. When a large number of substitutes are available, consumers respond to a higher price of a good by buying more of the substitute goods and less of the relatively more expensive good. In addition, goods or services that are considered necessities tend to have less elastic (more inelastic) demand, whereas goods or services that are considered luxuries have more elastic (less inelastic) demands.

• Explain why the demand for the good or service provided by the organization you work for is elastic or inelastic. How does this influence pricing decisions?
• Provide examples on how the availability of close substitutes affects price elasticity of demand.
• Give specific examples of necessities or luxuries, and explain how they affect price elasticity of goods or services.

Discussion Question 2 of 3

Externalities come about when individuals impose costs on or provide benefits to others but do not consider those costs and benefits when deciding how much to consume or produce. Thus externality is a cost or benefit received by a person not involved in a market transaction, and therefore not reflected in the market price of the commodity being transacted. There are two types of externalities: positive externalities and negative externalities.

A positive externality exists when an individual or firm making an economic decision does not receive the full benefit of the decision. In this case, the social benefit is greater than the benefit that goes to the individual or firm.

A negative externality occurs when an individual or firm making a decision does not have to pay the full cost of the decision. If a good has a negative externality, then the cost to society is greater than the cost consumer is paying for it.

Both positive and negative externalities result in market inefficiencies unless proper action is taken.

• Describe your understanding of externalities by providing an example of a positive externality and a negative externality.
• Why do positive and negative externalities lead to inefficiency in the market economy?
• How can externalities be addressed using the private sector to reduce market distortions of externalities?
• What government policies help deal with positive and negative externalities by reducing inefficiency?

Discussion Question 3 of 3

The role of governments in the economy is one of the most debated issues in economics. Similarly, one of the most enduring debates of U.S. economic history focuses on the role of government in the economy. On the one hand, it is argued that government regulation of the economy is too little and too late. On the other hand, there is also a claim that the U.S. economy is no longer a free market due to too many regulations.

Moreover, the causes of economic and financial crises have been parts of the larger debate on the role of the government in the economy. Some argue that the accumulation of incorrect policies and lack of effective policies led to the recent and other economic and financial turmoil (crises). Accordingly, the failures of the main entities that manage our economy, which are the Congress, the executive branch of the Federal government represented by the Treasury Department, and the Federal Reserve System, lead to economic and financial crises. The other side claims that it’s the lack of regulations that lead to economic and financial crises.

• What are the roles of government in the market economy? Based the current economic conditions, to what extent should the government intervene in the market economy?
• What are the justifications given in favor of more government involvement in the market economy?
• What are the reasons given in favor of less government involvement in the market economy?

Case Study

Read the LAST Word piece, “Government Failure” in the News, in Chapter 17. Investigate the use of special-interest lobbyists for some of these articles. The process of lobbying legislatures is itself a big business. State legislatures are under the same kind of pressure from interest groups as the Senate and the House of Representatives. Provide an example to discuss how special interests can succeed in perpetuating policies that are opposed by the majority of voters because the costs of organizing and motivating groups to take political action increase with group’s size.

Construct thoughtful, detailed responses to the answers contributed by at least three of your classmates.

Unit 2 Assignment

According to the law of demand, if price increases, quantity demanded of a good or service will decrease or vice versa. Price elasticity of demand tells us how much quantity demanded will decrease when price increases or how much quantity demanded will increase if price decreases.

On the other hand, according to the law of supply, if the price increases, quantity supplied of a good or service will increase. Similarly, if price decreases, quantity supplied will decrease. The degree of sensitivity (responsiveness) of production/supply to a change in price is measured by the concept of price elasticity of supply.

Total revenue is calculated as the quantity of a good or service sold multiplied by its market price. Thus it is a measure of how much money a company makes from selling its product. The core objective of a firm is maximizing profit. One of the ways to maximize profit is increasing total revenue. The firm can increase its total revenue by selling more items or by raising the price. Among others, this depends on the nature of the price elasticity of demand. Moreover, the length of time is an important factor in determining price elasticity of demand and supply.

• Explain the relationship between the price elasticity of demand and total revenue. What are the impacts of various forms of elasticities (elastic, inelastic, unit elastic, etc.) on business decisions and strategies to maximize profit? Explain using empirical examples.

• Is the price elasticity of demand or supply more elastic over a shorter or a longer period of time? Why? Give examples.

• What are the impacts of government and market imperfections (failures) on the price elasticities of demand and supply?

The Assignment should be a minimum of five pages in length, excluding title page and reference page. Your paper must incorporate several quality references, and it must be organized in APA format.

Discussion Question 1 of 3

One of the main principles behind mainstream, neoclassical economic theory is that individuals act to optimize their own utility. Utility is generally defined as a satisfaction (pleasure) that an individual derives from consuming or using a specific good or service. One of the most interesting areas in utility theory is the paradox of value. There is a paradox of value due to the fact that absolute necessities such as water and air are valued (priced) very cheaply, whereas other goods like diamond, which are not necessities, are highly valued and command the most outrageous prices.

In order to understand the paradox of value, there is a need to distinguish total utility from marginal utility. The total satisfaction obtained from all units of a particular good or service consumed over a period of time is called total utility. An additional or incremental utility derived from consuming one more unit of a good or service is called marginal utility. Thus marginal utility is the change in the total utility that results from one unit change in consumption of a good or service within a given period of time.

Using the Diamond-Water Paradox as a guide (refer to page 124 of the textbook) and two other goods of your choice, illustrate the paradox of value. Explain the roles total utility and marginal utility play to understand this paradox.

Discussion Question 2 of 3

Utility is a satisfaction that an individual derives from consuming or using a specific good or service. Total utility indicates the total amount of satisfaction or pleasure an individual derives from consuming some specific quantity of a good or service. Marginal utility refers to the additional satisfaction a consumer gets from an additional unit of a good or service she/he consumes during a given period of time.

The law of diminishing marginal utility states that as a consumer consumes more and more units of a specific good or service, the additional utility the consumer derives from the successive units keep on diminishing (declining) over time.

Diminishing marginal utility explains a lot about consumer behavior in the economy. Select a specific consumer behavior and construct a “mini case study” that highlights the workings of marginal utility and how it affects the consumption pattern.

Discussion Question 3 of 3

There are four key types of market structures in the market economy: perfect competition, monopoly, oligopoly, and monopolistic competition. Each of the market structures has its own key distinguishing features. The marketing strategies of firms also differ from market structure to market structure.

1. Pick a specific industry from one of the market structures and explain how it would function and maximize profit.

2. Which market structures do you think benefit consumers more than others? Explain by using examples.

3. We are daily exposed to a number of advertisements on TV, in radio and in other places. Which market structures are the most dominant in the advertisement industry? Why?

Unit 3

Case Study

The marginal product of any input in the production process is the increase in the quantity of output produced from one additional unit of that input. According to the Law of Diminishing Returns, the marginal product of an input declines as the quantity of the input increases over time, other factors remaining the same.

In the workplace, you often see diminishing marginal product, where the additional output produced per worker drops as they perform their jobs over time.

· As a manager, what are some practical things you could do to raise marginal product per employee that also benefit the firm? In your answer use a company you currently work for or one you worked for in the past.

· Give specific examples and discuss how diminishing marginal productivity affect marginal revenues and profits of firms.

Construct thoughtful, detailed responses to the answers contributed by at least three of your classmates.

Assignment 3

For most firms today, success or failure is determined by the ability to find, attract, keep, develop, and tap into the most talented workforce that can be assembled. Use the Kaplan Online Library to search for articles related to this topic. Write a 5-page report outlining what firms need to do in order to bring in the most talented people (from anywhere) and make the fullest possible use of their abilities. Support your paper with at least two articles from the Library. Your paper must be APA compliant.

GB540 Unit 3 Assignment Rubric
Content and Analysis	Points Possible	Points Earned

Discussion Question 1 of 3

There are a number of economic and non-economic factors that affect long-run economic growth of countries. Among these factors, roles of physical capital, human capital, technology, and natural resources in influencing long-run economic growth of aggregate output per capita are widely discussed. Governments also play their roles in promoting and sustaining long-run economic growth of countries.

Empirical studies indicate that natural resources no longer play the largest role in affecting long-run economic growth since some of the natural resource rich countries are much poorer than natural resource poor countries.

Based on your reading of Chapter 25, other course materials, and your knowledge and experience, analyze the following questions.

1. What factors might contribute to a low or high growth rates in a country? Why do some poor countries experience higher growth rates than others when all face the same challenges?

2. Why resources are no longer the most important indicators of economic growth disparity among countries? Which other economic and non-economic factors do you think explain the reasons behind growth disparities among countries?

3. How can sustainable long-run economic growth be realized? What are the roles of the government in achieving sustainable long-run economic growth?

Discussion Question 2 of 3

Gross Domestic Product (GDP) measures the market value of all final goods and services produced within a country in a given period of time. In other words, GDP measures continuous flow of money from households to firms and then back to households in the whole economy. (Refer to Chapter 24)

The trend of the GDP growth rates is the key indicator of macroeconomic fluctuations (business cycle), which include expansion, boom, contraction, and recession. Thus the real GDP is used to explain how well the overall economy of a country is performing whereas GDP per capita is used as a natural measure of the economic well-being of the average individual in a given country.

However, there are limitations (shortcomings) in using the GDP as a measure of national income as well as a measure of national welfare.

1. What are the limitations of the GDP in measuring total output and national welfare? What products (services) are excluded from the GDP computation?

2. Is the GDP measure underestimating or overestimating national production and total income in the economy? Why?

3. What are the impacts of the shortcomings of the GDP as a measure of the national product and national welfare?

Discussion Question 3 of 3

Both inflation rate and unemployment rate are closely watched aspects of macroeconomic performances of the economy, and they are also among the key variables guiding macroeconomic policy targets. Moreover, the sum of inflation rate and the unemployment rate is described as the misery index, which purports to measure the health of the economy and welfare.

The existence of high unemployment rate is a serious problem for households and for a nation at large. National outputs of goods and services decline during the recessionary gap of the business cycle and lead to high rate of unemployment. On the other hand, inflationary pressure leads to high inflation rate, which in turn leads to a decline in real income. Thus high inflation rate has adverse effect on welfare of citizens, and the general economic well-being of a nation since it reduces effective demand and purchasing power of the people.

Studies indicate that there is a short-run tradeoff between inflation rate and unemployment rate. Thus, in the short-run the tradeoff of between inflation rate and unemployment rate creates a challenge for macroeconomic policymakers.

1. If you were macroeconomic policymaker, how do you balance the short-run tradeoff between inflation rate and unemployment rate? Explain.
2. Official unemployment rate is an imperfect measure of joblessness. Give examples on how the definition of unemployment rate overstates or understates the number of jobless people in the economy.
3. Some policymakers and analysts argue that unemployment benefits create disincentives for job search and prolong the unemployment of workers. What’s your opinion on the relationship between unemployment benefits and labor market participation of the unemployed people?

Unit 4 case

Case Study

Go to the website for reports on Global Competitiveness at:
http://www.weforum.org/issues/global-competitiveness

Click on the "Reports" tab and find the latest report entitled "Global Competitiveness Report" that is available. Spend some time going through the materials there and become familiar with the criteria used for the rankings. Next, pretend that you have been put in charge of improving the ranking of a country in the bottom half of the list and outline a plan for moving up in the rankings. You can use a specific country or speak in general terms that apply to any nation seeking to become more competitive.

Construct thoughtful, detailed responses to the answers contributed by at least three of your classmates.

Assigmet 4

Select a GLOBAL Fortune 500 company (it cannot be one you work for) that operates in the United States and in other nations around the world. You will be using the same firm for the Unit 5 Assignment and the Unit 6 Final Project, so make sure it is one you are interested in and that has plenty of good sources of information available.

1. Summarize the firm’s history, its recent and current operating results, and the economic, social, and political forces that affect it most.
2. Present a brief SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).
3. Discuss the factors it will need to predict, plan for, and adjust to in the future.

The Assignment is to be a minimum of five pages long (title pages, bibliographies, etc., do not count) and in APA format. A good variety of objective, high-quality, current sources need to be used.

GB540 Unit 4 Assignment Rubric
Content and Analysis	Points Possible	Points Earned
A global Company was chosen.	5
Paper includes a discussion with an appropriate analysis of the firm’s history.	5
Paper includes a discussion with an appropriate analysis of the firm’s recent operating results.	5
Paper includes a discussion with an appropriate analysis of the firm’s current operating results.	5
Paper includes a discussion with an appropriate analysis of the firm’s economic forces that affect the firm the most.	5
Paper includes a discussion with an appropriate analysis of the firm’s social forces that affect the firm the most.	5
Paper includes a discussion with an appropriate analysis of the firm’s political forces that affect the firm the most.	5
Paper includes a brief SWOT analysis for the firm.	5
Paper includes a discussion with an appropriate analysis of the factors the firm needs to predict for the future.	5
Paper includes a discussion with an appropriate analysis of the factors the firm will need to plan for the future.	5
Paper includes a discussion with an appropriate analysis of the firm’s the factors that will need to be adjusted to in the future.	5
Paper includes a minimum of three current references.	5
Writing Style, Grammar, APA Format	15
Total	75

Discussion Question 1 of 3

Fiscal policy refers to the changes in government’s choices regarding the overall level of government spending and taxes to affect the behavior of the economy. Fiscal policy can expand or contract aggregate demand. The government sometimes uses the fiscal policy instruments in an attempt to stabilize the economy. Under a recession, an expansionary fiscal policy is adopted, which involves lowering taxes and increasing government spending. In an overheated expansion with an inflationary pressure, a contractionary fiscal policy is utilized, which requires higher taxes and reduced spending. Economists and policymakers disagree about how active the government should be in these efforts.

Based on the above summary and the detailed descriptions of the issues in the textbook (chapter 30) discuss any of the following set of questions:

1. What are the expansionary and contractionary fiscal policies? What are their policy instruments? How are they used to deal with the inflationary gap and recessionary gap?
2. What is the relationship between budget deficits and national (public) debt? Why has the USA national debt been increasing for decades?
3. Should the tax laws be reformed to encourage saving? Do you think consumption tax is better than income tax?

Discussion Question 2 of 3

The Federal Reserve is responsible for regulating the U.S. monetary system and setting monetary policy. Monetary policy refers to what the Federal Reserve, the nation's central bank, does to influence the amount of money and credit in the U.S. economy. What happens to money and credit affects interest rates (the cost of credit) and the performance of the U.S. economy.

The Federal Reserve’s three instruments of monetary policy are open market operations, the discount rate and reserve requirements. The Fed controls the money supply primarily through open-market operations. Accordingly, the purchase of government bonds increases the money supply, and the sale of government bonds decreases the money supply. The Fed can also expand the money supply by lowering reserve requirements or decreasing the discount rate. It can contract the money supply by raising reserve requirements or increasing the discount rate.

http://www.federalreserve.gov/

Based on the above summary and the detailed descriptions of the issues in the textbook (Cchapter 33) discuss any of the following set of questions:

1. What are the expansionary monetary policy and contractionary monetary policy? What are their policy instruments? How are they used to deal with the inflationary gap and recessionary gap?
2. Do you think monetary policy or fiscal policy is likely to be the more effective tool of stabilization policy? Why?
3. If the Fed wants to increase aggregate demand, it can increase the money supply. If it does this, what happens to the interest rate and rate of inflation? Why might the Fed choose not to respond in this way?
4. Should monetary policy be made by rule rather than by discretion? Why?

Discussion Question 3 of 3

The textbook describes how banks “create” money. It also highlights the impacts of this money creation during the periods of inflationary gap and recessionary gap. During the period of a recessionary gap, higher rates of unemployment may be accompanied by lower prices. Banks have a role in the recovery process with their lending roles.

The modern money is called fiat money. Fiat money is a currency, which is declared by a government to be legal tender. It is not backed by a physical commodity like gold or silver, and it has value solely because a government accepts it for payments of taxes and debts. Fiat money has been an object of serious criticisms ever since its creation. Opponents of the fiat money argue that by not backing up their currency to tangible commodity like Gold, governments facilitate printing of money, which has been proven to generate inflation.

Based on the above summary and the detailed descriptions of the issues in the textbook (chapter 32) discuss any of the following set of questions:

1. Explain in your own words the process by which banks “create” money. What is the reserve requirement and what role does it play in money creation?
   
2. Discuss the impact of that ability to create money on the economy during an inflationary gap and during a recessionary gap. Considering the higher rates of unemployment and the likelihood of lower prices during a recessionary gap, do banks, with their lending policies, contribute to a recovery?
   
3. The only thing backing up a nation’s currency (fiat money) in the modern world is faith in the government issuing it. If this is so, what should governments do to maintain a stable currency? How can the Central Bank (the Federal Reserve) build trust in the currency? What actions would undermine a currency?

Unit 5 case

Case Study

A country that has never had its own currency has formed a central bank and put you in charge of developing money. It needs to perform the necessary functions of any good currency efficiently (i.e., being a medium of exchange, a store of value, and a unit of account). Because your country is interested in trading with other members of the global economy, other nations must have faith in its fitness and the currency exchange markets must be willing to accept it. Though your answer needs to be correct in terms of economic theory (so be sure to read the assigned chapters), creativity and having fun with it is strongly encouraged.

Construct thoughtful, detailed responses to the answers contributed by at least three of your classmates.

Unit 5

For this Assignment, you are to continue using the same Fortune 500 company you selected in Unit 4. The focus here is on its domestic (American) operations, with global issues left for Unit 6. Begin by reading through the material on economic indicators in the Webliography. Select 6-10 indicators that are of particular relevance to your firm and explain why. Next, outline a strategy for how the firm should respond to the information provided by the economic indicators with the goal of maximizing revenues in the years ahead.

The Assignment is to be a minimum of five pages long (title pages, bibliographies, etc., do not count) and in APA format. A good variety of objective, high quality, current sources need to be used.

Discussion Question 1 of 3

The gains from specialization and trade are based on comparative advantage, which reflects the relative opportunity cost. When countries specialize in producing goods and services for which they have comparative advantages, total production in the global economy rises. Trade advocates argue that this increase in the size of the economic pie can be used to make all trading countries better off through international trade. Economists also use the principle of comparative advantage to advocate free trade among countries as a better policy. Trade is not based on absolute advantages countries have but the relative (comparative) advantage.

1. Does free trade contribute to the improvement of economic well-being?
2. Who gains and who loses from free trade among countries, and how do the gains compare to the losses? Explain using examples.
3. Do you think the USA export and import of goods and services are based on the principle of a comparative advantage of trade? Explain.

Discussion Question 2 of 3

A balance of trade (trade balance) is the difference between the monetary values of exports and imports of a country’s economic output over a given period of time. Trade balance can be positive (favorable) when the value of exports is greater than the value of imports. The positive trade balance is also called trade surplus. On the other hand, if the value of imports is greater than the value of exports, the trade balance indicates trade deficit.

Trade balance affects the Gross Domestic Product (GDP) of a country since net export is a component of the GDP. It also affects the exchange rate of a country’s currency.

1. How does trade stimulate long term economic growth? Explain.
   
2. Which part of international trade creates more jobs? Is it export or import? Why?
   
3. Is it trade deficit or trade surplus that contributes more to economic growth? Why?
   
4. Why do countries impose trade restrictions on goods and services they import from other countries? What are the pros and cons of trade protectionism?
   

Discussion Question 3 of 3

Quantity supplied and demanded for products change as the prices of the products change. Similarly, supply and demand for foreign currency result in changing prices of a currency. The price of a currency changes as demand for foreign currencies changes. This price of foreign currency, in terms of U.S. currency, is known as the foreign exchange rate. Exchange rate simply indicates how many USA dollars it will cost us to purchase a unit of foreign currency. This floating foreign exchange rate changes daily with the international supply and demand for currency.

1. What are the impacts of currency devaluation and revaluation on international trade?
   
2. What are the factors that increase and decrease the demand for a foreign currency?
   
3. What is the difference between pegged currency (fixed exchange rate) and floating exchanged? What are their pros and cons of the two forms of the exchange rates?
   
4. What is currency war? How does it affect trade between countries?

Unit 6 case

Case Study

International trade has pros and cons.Economists generally support free trade. International trade has played a significant part in promotingeconomic development and technology transfer among countries. There are also various arguments in favor of restricting international trade: protecting jobs, defending national security, helping infant industries, preventing unfair competition, and responding to foreign trade restrictions.

1. What is the impact of free trade on domestic job creation policy? Elaborate with examples.

2. What the impacts of outsourcing and off-shoring on trade liberalization (globalization) and economic structure?

3. What are the pros and cons of importing cheap goods and services?

Unit 6

The Final Project is to be submitted as a PowerPoint presentation of approximately 20-25 slides. Material from the Unit 4 and Unit 5 Assignments can be used to provide a background and foundation upon which to build. While the primary focus of the Final Project should be on your firm’s global operations, integrate information on the regional and national level, as well. How have they done in the past? What is their current state? What kinds of plans and possibilities do they have for the future? Is there room for improving what they do? Should new ventures be added or old ones subtracted? As you can see, the field is wide open for you to construct your project in the most relevant way you see fit.

As parts of the Final Project you are to include an 18-24 month forecast and a strategic audit (an analysis of how well the firm’s strategies have worked to date). Your conclusion should include a clear set of recommendations that are well supported. The project must include APA format references on the final slide and in-text references on the slide where information is presented. Include a minimum of three high-quality, up-to-date sources. It is to be submitted to the Week 6 Dropbox by the end of Unit 6.

GB540 Unit 6 Assignment Rubric
Content and Analysis	Points Possible	Points Earned
PowerPoint presentation includes 20-25 slides.	10
Presentation includes an appropriate analysis of the firm’s global operations integrating information at the regional and national level.	13
Presentation includes an appropriate analysis of how well the firm has operated in the past.	13
Presentation includes an appropriate analysis of the firm’s current state.	5
Presentation includes an appropriate analysis of plans and possibilities the firm has for the future.	10
Presentation Includes an appropriate explanation and analysis of where there is room for improvement.	10
Presentation includes an appropriate analysis regarding whether the firm should add new ventures.	10
Presentation includes an appropriate analysis whether the firm should subtract diverge away from old ventures.	10
Presentation includes an18-24 month forecast for the firm.	10
Presentation includes a strategic audit that provides an analysis of how well the firm’s strategies have worked to-date.	5
Writing, Grammar, appropriate use of limited text and bullet points. Final slide includes at least three references in APA format. In-text references are included on appropriate slides throughout the presentation where applicable.	24
Total	120