Economics Classical and Keynesian Essay

1. Suppose during 2012 there is a sudden unanticipated burst of inflation. Consider the situations faced by the following individuals—who gains and who loses? a. A homeowner whose wages will keep pace with inflation during the year, but whose monthly mortgage payments will remain fixed. This person has gained. Nominal income is income that you receive in a given time period and it is measured in current dollars. Real income is nominal income adjusted for inflation and is the purchasing power that your money has. Real income dictates the amount of goods and services the nominal income will buy. The homeowner’s nominal income has increased (say 3%), but inflation has increased by the same amount (3%). The 3 percent increase in inflation reduces the 3 percent increase in nominal income, so the nominal income has not increased faster than inflation. The nominal income has kept pace with inflation. The homeowner’s gain is in regards to his fixed mortgage. Because his mortgage is fixed, it is immune to the inflation increase. If his nominal income in 2011 is $30,000 and his mortgage is $12,000 per year, he has $18,000 remaining to pay all other expenses in 2011. If the homeowner receives a 3 percent raise, his nominal income for 2012 will be $30,900.00. His mortgage payment is fixed and will remain $12,000.00 per year. This leaves $18,900.00 of nominal income. When you reduce this nominal income by 3 percent to adjust for inflation, the homeowner has $18,333.00 of real income to pay for all other expenses in 2012. This is an increase of $333.00 from the year 2011 to 2012. This is not a huge increase, but this homeowner does gain. He can purchase more goods and services in 2012 than he did in 2011. 2011 Budget 2012 Budget Nominal income for 2011 $30,000.00 Nominal income for 2012 with 3% raise from 2011 $30,900.00 Mortgage in 2011 $12,000.00 Mortgage in 2012 $12,000.00 Money remaining for other expenses $18,000.00 Money remaining for all other expenses for the year 2012 before adjusted for inflation $18,900.00 Subtracting 3% from $18,900.00 to adjust for inflation, the real income per year is $18,333. This is the money remaining for all other expenses in 2012: $333 more than in 2011. $18,333.00 b. An apartment landlord who has guaranteed to his tenants that their monthly rent payments will remain the same as it was in 2011. The landlord loses because he receives less real income when inflation increases unexpectedly. The rent from his tenants becomes less than if prices had remained stable. The landlord’s income comes from the rent payments of the people living in the building. If he collects $200,000 in 2011 from rent payments, his nominal income for 2011 is $200,000. If inflation is 3 percent in 2012, his real income decreases. Real income is nominal income adjusted for inflation. Three percent inflation would reduce the nominal income by $6,000. This person’s real income would be $194,000. This is obviously less purchasing power than he had in 2011. Because the landlord’s nominal income stays the same and prices increase, his real income falls and his money has less purchasing power. He can buy fewer goods and services in 2012 than he did in 2011. The landlord’s nominal income has not risen faster than the rate of inflation and he ends up with a smaller share of total output. Inflation causes a redistribution of income and wealth. The landlord’s income has been redistributed. Inflation has caused $6,000 of the landlords’ money to be redistributed to the tenants. The tenants will continue to purchase at least as many goods and services in 2012 as they did in 2011. The landlord’s real income will fall relative to people whose nominal income increases with inflation. This income redistribution acts like a tax. It takes income or wealth from one group and gives it to another. Those who have gained in this situation are the tenants whose rent will not increase, but the landlord loses. c. A retired individual who earns a pension with a fixed monthly payment from their past employer during 2015: This person has lost. His nominal income remains the same, but his real income decreases because of  inflation and his dollars have less purchasing power. He has less money in 2012 to purchase goods and services than he had in 2011 and his standard of living decreases. He is able to purchase fewer goods and services than he could the previous year because his nominal income has remained the same and his real income is less. His real income has fallen relative to those whose nominal income has increased. His nominal income does not keep pace with inflation and he ends up with a smaller share of total output. 2. Explain the difference between REAL and NOMINAL GDP. Which do you suppose would be the more important measure when looking at long term economic growth as shown in the Aggregate Supply/Demand model? Gross Domestic Product is the dollar value of all the output of goods and services produced in a year in a country. Nominal GDP is that dollar value expressed in current prices. Real GDP is nominal GDP adjusted for price increases (inflation). Nominal GDP is calculated using current prices and real GDP is calculated using constant prices. Real GDP is an inflation-adjusted measure of physical output. Real GDP is the more important measure when looking at long term economic growth. The rate of economic growth measures the annual percentage increase in real GDP. Real GDP is the variable that is used to mo nitor long-term growth in the economy because it is the most comprehensive measure of economic activity. The Aggregate Supply/Demand model focuses on the behavior of two variables, the economy’s output of goods and services, as measured by real GDP; and the overall price level, as measured by the CPI. The output on the horizontal axis of the model is real GDP, which is the measure of the true value of annual national production. The amount of GDP output varies every year and so does inflation. Therefore, how we measure real GDP growth must be adjusted to reflect inflation. If the economy of a country in 2000 allowed for output to reach $100 million and in 2001 the economy allowed for output to reach $110 million, it appears that the economy has grown by 10 percent; but this is nominal GDP and has not been adjusted for inflation. When you adjust 2001’s GDP for inflation, say 5%, the real GDP for 2001 is $105 million. The economy has actually grown by 5 percent and $5 million dollars. This is still a large number, but not as large as $10 million. If you use nominal GDP to measure long-term economic growth, you are not getting the true picture of how much output has increased, or if it has actually fallen. If nominal GDP increases by 2 percent, but inflation  increases by 3 percent, output has actually declined by 1 percent. If you use nominal GDP, it could look like output has had a huge increase from year to year, but this gives a false measure. Nominal GDP has to be adjusted for changing price levels. Real GDP gives us an accurate reading of GDP because it measures output at constant prices. The more important measure of economic growth is reflected through real GDP. 3. Classical and Keynesian economists believe in a different role for the government in dealing with recessions. Explain the differences between the two theories and the different roles. Classical and Keynesian economists see the role of the government differently when dealing with a recession. Classical economists believe in the invisible hand and Keynesian economists believe in a helping hand. From the Classical point of view, the economy is inherently stable. They believe there is an automatic mechanism (an invisible hand) that moves the market toward equilibrium and stability. The Classical theory is based on the principle that the market can regulate itself when left alone. When output declines, it is only temporary and the market will self-adjust. Classical economists believe the role of the government during a recession should be to leave the market alone (laissez faire). Government intervention can o nly bring the economy down and impede the market mechanism from working. In the long run, the good of the economy is best served if the government does not interfere. Classical economists believe that long-run growth is more important and short-run losses are acceptable. The Classical theorists believe that supply creates its own demand (Say’s Law). If a good is produced, it will be purchased. Buyers and sellers just have to find a price acceptable to both. Classical economists believe that the economy is stimulated when more goods are produced. The concept of flexible prices is very important to the Classical theory. When demand slows, sellers can lower their prices to increase demand and thus restore equilibrium. If demand is too high, sellers can raise their prices to restore equilibrium. Flexible wages are also important to the Classical theory. When someone is unemployed, they can find another job by working for less money. Flexible wages guarantee that anyone who wants to work will work. Keynesian theory states that the economy is inherently unstable and needs a helping hand to find its equilibrium. This helping hand comes in the form of government intervention. Keynesian economists believe that the market is not capable of  achieving equilibrium by itself and it is possible that disequilibrium will last for a long time. Keynes believed that small changes in output, prices, or employment were likely to be magnified, not correcte d, by the invisible hand. He believed that the depression of the 1930s was not a unique event. He argued that a depression would happen again if we relied on the market mechanism to self-regulate. He saw that macro failure was the rule, not the exception. In the Keynesian economic model, the government has the important role of smoothing out business cycle bumps to ensure economic growth and stability. Keynes believed in helping the economy in the short run, not the long run. When in a recession, the government should not wait to see when or if the market will self-correct. Keynes believed the government should intervene to save jobs and income. Keynes saw that policy levers are both effective and necessary. Without such intervention the economy would experience repeated macro failures. The Keynesian perspective argues that an economy left alone will not reach its full capacity. Corrective intervention can come in the form of government spending (increased or decreased), tax cuts, or tax increases. Also, Keynesian economists believe that if you demand it, it will be supplied. Keynesian theory maintains that most economies are demand driven and supply is based on demand. Keynesian theory believes in inflexible prices and wages. Prices do increase, but prices are not as flexible when going down. Suppliers must make a profit and will not supply at a loss. It is the same for wages. Wages do decrease, but they are much more inflexible when traveling in that direction. Keynes also saw that the economy does, at times, call for a budget deficit or surplus. Duri ng a recession, the government can increase spending and/or lower taxes. This will cause the budget to run a deficit. Keynes also felt that when the economy is in good shape the debt should be paid. Debt payment can come in the form of spending cuts and/or tax increases. Keynes saw nothing wrong with an unbalanced budget when it was needed to keep the economy healthy and running smoothly. 3. Which do you believe is the relevant one in today’s current economic downturn? Keynesian theory is the relevant theory in today’s economic downturn. The market does need a helping hand. The economy can self-adjust, but the downturns can last for long periods and people suffer during these times. Without government intervention, an economic downturn can continue as it did in the 1930s. The government does have  policy levers available that they can use to shift the aggregate demand and/or aggregate supply curves. These measures help restore the economy to its full production possibilities potential.

Broken window concept

The â€Å"broken window† concept is among the most popular frameworks, designed for better understanding of the nature of crime and its prevention. George Kelling was the first criminologist, who suggested that even tiny problems are visible – for instance, a broken window points to the house owner’s ignorance and indifference. The paper is intended to discuss the concept and its application in details.â€Å"The essence of â€Å"broken windows† is that neighborhood disorder –physical decay, such as graffiti, litter and dilapidation; and minor misconduct, such as public drinking and vagrancy – will, if left unchecked, signal potential miscreants that no one is watching† (Miller, 2001, p. 27). This means, grave crimes begin with minor misdemeanors, and notorious criminals like serial killers often ‘begin with’ drug or alcohol abuse, which grow into social pathology, constantly reinforced by the conviction in the overall perm issiveness (Miller, 2001).Conversely, when eliminating the traces of minor misconducts like litter and graffiti in public places, the visitors become more conscientious about the overall public safety in this place. At first, the concept was applied in subways: Bratton, who received a piece of â€Å"broken window† advice from Kelling and subsequently wrote: â€Å"Fare evasion was the biggest broken window in the transit system. We were going to fix that window and see that it didn’t get broken again† (Miller, 2001, p.28). Thus, the group increased the number of policemen, supposed to detect the stowaway passengers – as a result, they found that a number of these ‘wrongdoers’ carried illegal arms and some of them had light drugs like marijuana. Finally, the subway became much cleaner and safer, as the number of combats and conflicts substantially decreased. Later, Mr. Bretton was hired as New York police commissioner, assigned to struggle with street prostitution.Violent and aggressive behavior and public drinking. The executive of the law enforcement agency introduced new computerized systems of surveillance in public places and increased the staff of the agency –as a result, the number of felony crimes fell beyond the expected decrease of the aforementioned misdemeanors (Miller, 2001). On the other hand, the causes of crime are still vague, as a complex of factors contribute. Most studies, however, empirically confirmed the â€Å"broken window† idea.For instance, Skogan conducted document analysis and scrutinized the earlier surveys in more than 40 localities. â€Å"He found that measures of social and physical decay correlated with certain kinds of serious crimes† (Miller, 2001, p. 28). On the other hand, new obstacles to policing emerged. As Kelling notes (1999), proactive approach to policing (prevention of crimes through putting the â€Å"broken window† concept into practice) is nowadays viewed by public as â€Å"soft policing†.On the other hand , â€Å"Community policing is inherently proactive: scan for problems; diagnose them; try to prevent them from occurring again; if they recur, try to limit the damage and restore the victim/family/community’s functioning† (Kelling, 1999, p. 10). This means, community policing often involves much more efforts than â€Å"crime fighting†, as in this case the commissioner or the police officer acts as an strategic analyst, supposed to have the ability to anticipate problems.Kelling’s approach to policing inherently includes regular interviews with community members, which means, police officers should keep in touch with the residents in order to identify the discuss the problems the community members are concerned about. In addition, the functioning of the whole law enforcement apparatus should be more transparent for community members, i. e. they should have an opportunity to learn the reason s for their neighbor’s arrest, for instance, as this measure is likely to act as a deterrent for others and a reminder about the policy’s care about public safety.On the other hand, a number of critics expressed their fear of the possible tendency for the expansion of the â€Å"soft policing† and the substantial elimination of reactive and radical measures. In this sense, Kelling alleges: â€Å" The fact that police add options to their repertoire of methods, try to limit damage and restore functioning does not mean that conventional assertive law enforcement is disallowed as a legitimate police tactic.For example, understanding the dynamics of New York City’s â€Å"squeegee men† –unwanted car window washers who intimidate drivers into giving them money – and talking to them did nothing to deter their behavior† (Kelling, 1999, p. 11). Nevertheless, as one can understand, civil law can be used by the police – as Kelling s tates, the new initiatives including such penalties like forfeiture, restitution and civil fines are placed upon those committing domestic violence, illegal weapons possession or disclose aggressive racist behavior.This means, a punishment should refer to the least possible intervention into the person’s life: for instance, if a criminal is not aggressive or dangerous and hasn’t committed grave crime, arrest is likely to appear a redundant measure. To sum up, the ‘broken window’ approach to policing refers not merely to the elimination of minor crimes, but also to the overall prevention of deviance and more extensive use of civil liberties in the issues like discretion.In general, Kerlling’s position is positivistic, as he views individuals as basically disciplined and law-abiding, but in order to increase public awareness in the importance of citizens’ own efforts in the sphere of public safety, it is important to show them that the police a re sensitive and responsive even to the minor misconducts. Reference list Miller, D. (2001). Poking Holes in the Theory of ‘Broken Window’. Chronicle of Higher Education, 2: 27-34. Kelling, G. (1999). â€Å"Broken Windows† and Police Discretion. National Institute of Justice Research Report. Available online at: http://www. ncjrs. org/pdffiles1/nij/178259. pdf

Honesty In Advertising? Insanity!

Advertising is surely the most common art we see today. We have to go out of our way to see offensive movies or works of fine art, but advertising images are everywhere. We see them whether we want to or not, on billboards as we drive to work, on the walls of stores when we shop, in magazines and newspapers, on television, and on the products we use. We even get them in the mail. Everything gets advertised. Advertising industry is the biggest one today. But what is happening inside of advertising world? â€Å"The characters in this film do not depict people with real mental illness.Mental illness is a serious disease that affects millions of people. † Thus begins †Crazy People†, schizophrenic comedy that is very funny when it's a satire on modern advertising. Film talks about two types of nut cases: ones that are committed to institutions and the others who think they are normal and live on the other side of the wall. There are some targets of satire throughout a f ilm. First, this is the job itself and way of living of admen. †Let's face it, Steve,† says Emory Leeson, main character of the film to his associate, †you and I lie for a living. † Emory is a Madison Avenue burned-out adman suffering a breakdown.His wife has walked out of their suburban house, taking the furniture with her. Emory is suffering from writer's block. †Novelists have writer's block,† screams his partner, Steve. †All you do is write little slogans to go with the pictures. † (Canby) In a manic burst of energy, Emory creates a dozen new ad campaigns for everything from Volvo (†Boxy but good†) to United Airlines (†Most of our passengers get there alive†). He calls it †truth in advertising. † Actually, the ads are not so much truthful as they are crass. But Leeson feels they will tap into the everyday mindset of the common man.This is funny stuff, but Emory’s boss doesn't think so. Ste ve gently carts him away to a private mental hospital. Another target of satirizing is the advertising itself. Whether it is truthful or dishonest, consumer †eats† catchy slogans. You can say the right thing about a product and nobody will listen. You've got to say it in such a way that people will feel it in their gut. Because if they don't feel it, nothing will happen. Emory's †truthful† campaigns somehow reach all of the national magazines and appear on television, where they become instant hits. Leeson’s instincts are proven to be correct.People love them and sales zoom. But his boss and his crew can't grasp this â€Å"truth† concept. So they ask Emory to come back. He agrees to do more ads only if his friends – his fellow asylum inmates – can help. Soon the asylum turns into a productive business center. They are energized and inspired by Emery, who unwittingly wins back his former company's interest after an accidental truthf ul ad campaign makes headlines. One more satirized point, which depicts clearly that there are no big differences between admen and clients of mental hospitals at all, is that both of them making their job very well.Moreover, advertising ideas of insane people turn out to be more effective. Using the theme of sanity and insanity, film achieves the satire in comical situations, which articulate erected issues of modern advertising. â€Å"Crazy People† is equivalent to those commercials that pretend to be sending themselves up. Its upside-down ad campaigns wouldn't rate a smile in a college humor magazine, at least in part because they knowingly celebrate the system they are supposed to be satirizing.The concept is high but fraudulent. Interesting, that the director of film, Tony Bill said in interview he is counting on the controversy that is sure to be stirred up over †Crazy People† because of the fact that all the advertising in the film was used without permissi on or consultation. (Babbis) Conclusively, one trend in advertising, around no doubt for years that has become particularly shameless of late is to say exactly the opposite of what a company or product actually does.The implication is that nowadays people will accept anything you tell them. Pioneer of advertising Leo Burnett said, †Regardless of the moral issue, dishonesty in advertising has proved very unprofitable. † But perhaps everybody knows, consumers and advertisers alike, that anything anyone says doesn't matter any more. Finally, I think film accomplished with its goal and if it was ridiculing modern advertising, †Crazy people† have done it in a very funny and humorous way.

Dexterity Impairment

Definition: Dexterity Impairment (Arms/Hands/Fingers) Reduced function of arms and hands makes activities related to moving, turning or pressing objects difficult or impossible. This does not influence speech communication itself but makes it hard to make a phone call or use a wide range of other equipment. Big button phones, text-to-speech and other handy products If you have problems with dexterity you don't have to struggle with small buttons or fiddly switches. Many of our phones have features which may help make using them easier.More about Easy grip handsets Handsfree and headset options Large or well-spaced buttons Memory store to reduce the number of times you have to press buttons to make a call Speed dial options so you can store frequently used numbers under dedicated buttons for one touch dialing Pre-dial facility to check the number you have entered is correct before dialing Dedicated 1571 buttons for easy message retrieval. BT Big Button 200 The BT Big Button 200 is our most popular phone, with lots of features to make calling easier.It has large, well spaced buttons ideal for anyone who struggles to see a smaller keypad, easy volume controls, an inductive coupler for use with a hearing aid, and much more. . Simple tips to help with dexterity Keep items you use regularly in places that are easy to reach, perhaps get a cordless phone. Don't use your hands for a long period of time without breaks, you may like to consider a hands free telephone. Consider making adjustments to your home like adding hand rails or lever taps.

Divorce has different legal and social implications for the Divorce Essay

Divorce has different legal and social implications for the Divorce Arab and Muslim woman. Discuss, giving examples - Essay Example This paper critically discusses the legal and social implications of divorce for the Arab and Muslim woman with particular focus to examples in various Islamic countries. Firstly, there are a number of legal implications related to divorce in the Islamic societies particularly for women. Legally, although matters of marriage and divorce are largely governed by the Sharia law, the rules of Islamic divorce and consequently, its legal implications vary among various Islamic jurisprudence from one Muslim country to another due to different cultural traditions and practices. In most cases, the Islamic laws have always been largely seen to favor men in relation to their female counterparts in nearly all the Arab and Muslim countries. For instance, while Islam allows Muslim husbands to marry immediately after divorce, women are often required to observe a certain period of time (iddah) before they remarry or have any conjugal relations after divorce. An iddah is a period prescribed of about three months before the divorce becomes final. In most cases, the wife must remain in the home during this period to see whether a reconciliatory method of salvaging their marriage is achievable or if she is pregnant (Haddad et al 134). Another important implication of divorce for a woman in the Arab and Islamic world is the potential loss of custody of her children. For example, the legal system used in Tunisia only allows the woman to have the custody of children up to the ages of 7 for boys and 9 for girls after which the husband the custody reverts to the husband. Although the Arabic and Islamic laws do not make divorce acquiescently permissible, these laws perfectly well through its chapter-based hedges the sanctions of the practice with many defences. In the Suratul-Talaq for example, divorce is highlighted with a lot of positivity; this scripture teaches that when you divorce a woman, divorce them at their prescribed periods, and count accurately

The Role of the Customer Service Essay Example | Topics and Well Written Essays - 2000 words

The Role of the Customer Service - Essay Example The customer service in all organizations should ensure that the customers of the organization are fully satisfied. In case the service does not meet the customer’s expectation, the customer service person should let the management know to ensure that next time, the customer will be satisfied. The importance or the need of a customer service varies by the product or service given by the organization or it evens depend on the customer or the industry. The employees who work as the customer service should be ready to adjust to each and every customer of the organization. Introduction As mentioned above, the customer service refers to the way that the customers of an organization are provided by the products that they require either before they buy, during the buying process and even after the buying process. With a customer service, an organization is able to generate a lot of revenue and income from the customers. There are other various reasons why many organizations have cust omer service. There are many organizations which take the customer service as a part of their systematic improvement since they realize the much improvement that it brings to the organization. Through customer service, many perceptions of the customers can be changed about the organization and this would lead to increase in sales. The paper provides a critical discussion and evaluating the customer service by the organization. ... Current Customer Service and Expectations In the organization, one of the customer service given to the customers is the customer service. This is where the customer service attendants assist the customers in making the correct use of the products that they buy from the organization. With this, they help the customers to be cost effective in the usage of the product. The customer support service include giving the customer advice on the installation, how to maintain and also training the customer on the usage and disposal of the product once not in use http://businesscasestudies.co.uk/business-theory/operations/the-importance-of-customer-service . Since the organization also deals with technology products, the customer service agents also give technical support to the customers on how to operate the mechanical and software products that they buy from the organization. The organization has realized that the customer service is an important factor in the marketing mix for both the serv ices and the products. This is because high quality customer service assists the entire organization in creating loyalty with their customers. The organization has realized that many customers are not only concerned about the product that they buy from the organization but also the service that they get from the time they enter the organization to the time that they leave and also about how they complaints about the faults of the products are addressed (Turban 2002). It is true that the customer service bridge the gap between the company and the customers who are buying from the organization. It’s every customer’s expectation that the customer service in the organization is efficient,

How free is the free market Essay Example | Topics and Well Written Essays - 1250 words

How free is the free market - Essay Example The first example which comes to mind is the labour market and western democracies such as the UK and the US pride themselves on being welfare states which regulate how the labour is governed (Chomsky, 1996). However, this governance and control may have political objectives as described by Adams (2002). Unemployment becomes an important question for governments therefore they may try to maintain low unemployment figures with the regulation of the labour market (Sloman, 2004). In essence, what should have been a free market in an economic system is turned into a controlled market. It could be asked why a system which promotes the idea of a free market as described by Adam Smith and many others who came after him actually seeks to regulate labour at all? The notions concerning the acceptance of a free market and competition between individuals seem to run counter to labour regulations and minimum wage laws (Chomsky, 1999). The answer given to solve this apparent disjoint is that regulations are supposed to protect people from those who may exploit them. For instance, without proper regulations created by the government bodies the labour market could become imperfect as factory owners could be unfair to the labour they have employed (Botero et. al., 2004). Richardson (1999) says that, â€Å"regulation of the labour market has been a feature of Western economies since it was proposed as an amelioration of some of the worst abuses of workers experienced during the Industrial Revolution (Richardson, 1999, Pg. 1)†. Undoubtedly, the situation during the Industrial Revolution meant that mill owners could treat their labour as they wished no regulatory controls existed on wages or work hours. The situation might be not have changed much today had there been no control on the market even though writers such as Chomsky (1999) suggest that the neoliberal agenda allows the exploitation of