Universal Circuits Essay

Universal Circuits Essay.

1. Does Universal Circuit’s Irish controller have a convincing argument for the weakness of the dollar? Why or why not? How do you interpret the evidence? The Irish controller certainly presented a very convincing argument. He argues that since the American trade deficit has been growing, the dollar will be likely to depreciate. From 1980 to 1984 the dollar appreciated against the punt by about 50% and interest rate averaged 12.6% during the same period. These high interest rates have caused the dollar to appreciate against other currencies and slowed down the high inflation rate (10% in 1981) during that same period of time.

Irish controller’s main worry was that the dollar will be likely to depreciate. Over the last 2 years inflation has fallen to 5%, much lower than the 10% rate in 1981. A lower inflation rate could result in the US government lowering interest rates, which could cause the US dollar to decline. Increasing trading deficit, lower inflation, and lower interest rate signals a possible weakening dollar On the other there is a more optimistic view on the direction of the dollar.

Despite the US worsening balance on current account, the US dollar will likely to appreciate in both nominal and real terms due to foreign capital inflows motivated by good performances in equity and real estate markets, high real interest rate, and long-run prospects for growth and profitability. In other words, despite its large trade deficit, the US is still seen as a safe and profitable market to invest. The point of the CFO of universal circuits is that no one really knows in which direction the dollar will go and therefore speculating on this issue was of no real interest to those in the manufacturing business. 2. In view of the fact that the dollar is the Irish subsidiary’s functional currency, should the controller be worried about its exchange value? What is the nature of the foreign exchange exposures(s) faced by the Irish subsidiary?

Why isn’t the Irish subsidiary’s functional currency the Irish punt? Despite management’s perspective on speculation at the manufacturing business level, the Irish controller’s concerns deserve closer attention. The dollar and not the punt is the functional currency because all sales and a portion of the costs of the Irish subsidiary are denominated in dollar. The nature of the FX exposure that the subsidiary is exposed to is an operating exposure. This exposure again deserve a closer attention for the following reasons: 1) There is a mismatch between cash inflows and outflows, i.e. all sales are invoiced in dollars while a large portion of expenses are in the Irish punt 2) Principal competitors are located and supplied out of the US using the dollar 3) Transfer prices of the subsidiary are based on the US dollar price list

Given the table above, 66% of the subsidiary profit is exposed to FX change. If the dollar depreciate then the impact on this profit will be significant. This situation is even worst given the fact that 51% of the costs the operation must be paid in the stronger currency (punt). Would you approve the controller’s request to buy the punt forward? What considerations factor into your decision? There is no ……that the Irish subsidiary economic exposure needs to be hedged. However, the fact that the controller should perform it is somewhat debatable. There are three things that I will consider in making this decision: * Does he have the expertise to do so

* Is there an active market for a punt forward? What is the time horizon available? * What are other cost efficient alternatives

3. Considering Universal Circuits’ exposures worldwide, what general policy would you recommend concerning the handling of foreign exchange exposures? Should all exposures be converted or just some? How much of a role, if any, should foreign operating managers play in exposure management?

Universal Circuits Essay

Microeconomic statements Essay

Microeconomic statements Essay.

1. Indicate whether each of the following statements applies to microeconomics or macroeconomics, and why: 12 Marks Total

a. The unemployment rate in Canada was 7.0 percent in January 2010

Answer: This is the macroeconomic statement because it describes the unemployment rate of the whole country.

b. A Canadian software firm discharged 15 workers last month and transferred the work to India.

Answer: This is the microeconomic statement because it focuses in an individual Canadian software firm of how they make decision in transferring their 15 workers to other workplace in India.

c. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.

Answer: This is the microeconomic statement because it talks about specific incident that happened in Florida which causes the raise in price of one specific product which is the oranges.

d. Canadian economic output i.e. GDP (Gross Domestic Product) adjusted for inflation grew by 3.0 percent in 2010.

Answer: This is the macroeconomic statement because it describes the GDP of how much goods produced effects the inflation of the whole country in Canada.

e. Last week the Scotia Bank lowered its interest rate on business loans by one-half of 1 percentage point.

Answer: This is the microeconomic statement because it gives the information of the individual firm – Scotia Bank and what they did last week with the interest rate on business loan.

f. The Canadian consumer price index an indicator of national inflation rose by 2.2% in 2011.

Answer: This is the macroeconomic statement because it describes the rate of growth of the whole national inflation in 2011.

2. The Consumers Budget Lines: See pages 8 and 9. Suppose you won $15 on a Lotto Canada ticket at the local 7-Eleven and decided to spend all the winnings on candy bars and bags of peanuts. The price of candy bars is $0.75 and the price of peanuts is $1.50. 20 Marks Total

a. What does a production possibility curve represent? 2 Marks Answer: A production possibility curve represents the different combinations of goods and services that a country can produce in a fully employed economy with a fixed availability of supplies of resources and technology. In this case, the production possibilities curve represents the different combinations of consumer goods – automobiles and capital goods – forklifts in the country Exania.

b. Plot the data graphically (clearly label each axis and each point, showing which combinations are “Attainable” and which combinations are “Unattainable”). 6 Marks [pic] 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 c. Upon what 4 specific assumptions is this production possibilities curve based? 4 Marks

Answer: The 4 specific assumptions this production possibilities curve based are the full employment, fixed availability of supplies of resources, constant technology and the two goods.

d. If the economy is at point C, what is the cost to get one more automobile? 3 Marks a. (Hint: Trace the curve, how many forklifts do you need to give up?) Answer: If the economy is at point C, the cost to get one more automobile is (21-12)/(6-4) = 9/2 = 4.5 forklifts.

e. If the economy is at point C, what is the cost to get one more forklift? 3 Marks Answer: If the economy is at point C, the cost to get one more forklift is (4 – 2)/ (27-21) = 2/6 = 1/3 = 0.33 automobiles.

f. State the “law of increasing opportunity costs”. Explain how this production possibilities curve reflects this law. 2 Marks

Answer: The “law of increasing opportunity costs” is, as the production of a good increases, the opportunity cost of producing an additional rises. This production possibilities curve reflects this law by the shape and the slope of it. The shape is concave from the origin of the graph.

When we move from point A – point E, as we can see that we give up a larger amount of forklifts to produce the equal added amounts of automobiles.

g. Assume the Exania economy operates like the production possibilities table and curve you have plotted. If Exania were actually producing 3 automobiles and 20 fork lifts (plot this point as “F” ), what could you conclude about the employment of Exania’s available resources? 2 Marks

Answer: If Exania were actually producing 3 automobiles and 20 forklifts, I could conclude that the assumption of full employment is not applied or with other words, it could mean Exania is not being productivity.

h. To get to a point outside the production possibilities curve (That is, to experience economic growth) what would this country’s economy have to do? State 3 points. 3 Marks

Answer: To get to a point outside the production possibilities curve (economic growth), this country’s economy has to: 1. Increase in factors or quality of supplies (resources) 2. Give up some consumption of goods (automobiles) so more capital goods (forklifts) could be produced 3. Improve or innovate in technology.

4.Impact of events on the Economy: Explain (Using words), AND illustrate (With production possibilities curves) how if at all each of the following developments would affect the location and movement of a country’s production possibilities curve. In each case show and label the “Current Curve” and the “Future Curve” or “Point” as the case might be. (Read Page 19 before doing this question.) 8 Marks

a. The quality of college education increases. 2 Marks

Answer: The quality of college education increases which means there is an improvement in factor supplies quality (worker’s skills improve). This describes an economic growth by favouring the “future goods” – capital goods –education (point F) or in other words, the productivity would rise. Therefore, the country’s production possibilities curve would shift outward more from the origin to the right.

c. A new technique improves the efficiency of extracting iron from ore. 2 Marks Answer:

d. A devastating earthquake destroys numerous factories and other production facilities. 2 Marks Answer:

5. In the above Circular Flow Model of how the economy works, if box B represents the factor market and flow (3) represents money income, and then what do the other 10 unknowns represent? List each unknown and clearly state what they represent. 10 Marks

Answer:

A- Business or Firms – place to use input to produce goods and services B- Factor Market – place to exchange between business and household for income or input C- Household/ Individuals – place that have the factors of production (land, labour, entrepreneur, capital) D- Product Market – place to exchange between business and household for revenue or goods and service. 1- The money cost in forms of salaries, rent, interest, profit that (A) business or firms bring to the (B) Factor Market in order to get the input from (C) household. 3- The money income that (C) households get from (A) business or firms when doing trade-off in the (B) Factor Market. 6- The consumption, the money from income that (C) household brings to the (D) Product market in order to get goods and services provided by (A)Business/firms.

8- The money from (C) household when doing exchange for good and service at the (D) Product Market comes back to the (A) business/firms. 7- When (A) Business/firms produce goods and services then bring to (D) Product Market in order to get the money exchange from (C) household/individuals – who come to get the products and services. 5- The goods and services that are going home with (C) household/individuals after do exchange with (A) Business/firms in the (D) Product Market. 4- When the (C) household/individuals bring their sources (entrepreneur, labour, land, capital) to the (B) Factor Market to exchange with (A) Business and bring income back. 2- When (A)Business get the input from (C) household at the (B) Factor Market.

Microeconomic statements Essay

Ocean Park Swot Analysis Essay

Ocean Park Swot Analysis Essay.

For the SWOT analysis, the strength of OPHK is it had introduced lots of valuable animals before such as panda, Asian Small-clawed Otter, Spotted Dove and so on. They have already success in promote these animals and also build up a positive image of animal conservation in the world-wide. In addition, it had a good reputation in the market. As OPHK had opened over 30 years, it is also one of the famous attractions in Hong Kong. It is not only well-known in Hong Kong and also world-wide since OPHK had been ranked the World’s Seventh Most Popular Amusement Park.

Many tourists visit Hong Kong will visit OPHK as well. The large amount of capital is also the strength of OPHK. As promote the Koala may need a heavy advertising costs, a large amount of capital may allow OPHK to afford the cost. Weakness For the weakness, OPHK had the main competitor, Hong Kong Disneyland. Both of the theme parks offer the similar products and services such as amusement games, souvenir counters.

Moreover, the facilities are starting old and need to renovate.

As we can seen that there are some accidents happened in OPHK recently. For example, the “Mine Train” was collide to the previous train, “Ocean Park Tower” stopped because of power failure and so on. In addition, there is the most serious artificial accidents is the accident of “Ocean Express”, it cause 8 people injury. Those accidents will affect the confident of the tourists to visit the park. Opportunity The opportunity of OPHK is the market of Mainland China as it is the high exchange rate of RMB and the strong economy grows in China.

It lead to increase their purchasing power and they may willing to spend more money in travel and entertainment and also Hong Kong is one of the famous choice of them. Besides, OPHK had offer the SMARTFUN annual pass to the public and it entitles holder to unlimited admission to OPHK within a year. It may attract more people to visit within a period of time. OPHK promote the Koala Kingdom during this period because customer have chance to visit Koala in winter but not only in summer. Threat About the threat, besides of Hong Kong Disneyland, there are a great deal of competitors in the world.

For instance, Universal Studio in Singapore, Everland in Koera, Toyko Disneyland and the forthcoming Shanghai Disneyland and so on. Those theme parks provide the substitute product. It is also the choice of the visitors if they want to visit the theme park. Besides, other entertainments in Hong Kong such as karaoke, cinemas and bar are also the treat of OPHK. People may like to choose those entertainments to have fun since it is more convenient for them. Nowadays, there is a high inflation rate in Asia. People may reduce the money spend on entertainment. So, it may cause to reduce the income of OPHK.

Ocean Park Swot Analysis Essay

Emerson Electric Case Essay

Emerson Electric Case Essay.

Issuing debt in New Zealand is not necessary a nonstarter. Although it has a required coupon rate as high as 18.55%, the inflation rate has been floating freely and thus causing the CPI surprisingly high. Therefore, the purchasing power parity is proportional compare to the one in the United States or in Swiss. When paying out coupon, the high inflation rate has offset the high coupon rate. The cost of debt of New Zealand in its own currency is 4.6% in 1987/88(according to Government issued Treasury bill).

Therefore, in their own currency, to raise $65 million US dollars in New Zealand with a 2-year bond, the bond’s price should be 114.53. The first coupon payment is $21.2 in NZD, and the second payment would be the sum of second coupon payment plus the principle—135.7 million in NZD. The cost of debt in Switzerland is 4.0%. In the Swiss currency, $65 UDS converted to Swiss franc is 99.5 million in CHF.

The first coupon payment should be 4.5 million and the second payment is roughly about 104 million in CHF. If the company were to raise USD debt in the EURObond market, the first payment is 5.62million in USD and the second payment is $70.62 million.

However, if convert all the currencies back to USD, the results are different due to the interest rate difference in different countries. In New Zealand, the first coupon payment is 10.7million USD (by using CIP) which is different from 5.62million USD if the debt is issued in USD. Likewise, the second payment is to be 62 million USD which is less than the second payment if issued in USD. Therefore, the NPV of the debt if it is to be issued in New Zealand, would be 2 which is greater than if the debt is issued in USD, in which case the NPV would simply equal to 0. In CHF, the first payment made in CHF converted to USD would be 3.1 million USD. And the second payment would be equal to 0.33 million USD. In macroeconomics view, the forward rate depends on people’s expectancy about certain countries’ interest rates and inflation rate. In this case, New Zealand would be a better choice because, although its inflation rate has been floating high, there is a decreasing tendency throughout these years. The NPV is also positive and realizable.

Emerson Electric Case Essay

How Inflation Affects Function of Money Essay

How Inflation Affects Function of Money Essay.

Inflation is defined as a persistent increase in general price level. Inflation is measured by the proportional changes over time in some appropriate price index, commonly a consumer price index. General Price level refers to an average of all price in an economy and changes in reflect in the cost of living.

Inflation however affects many thing one being function of money such as medium of exchange, store of value, unit of account and standard of deferred payments.

Medium of exchange means that any item that is widely acceptable in exchange of goods and services.

The existence of a medium allows trade to take place without the need for a joint coincidence of wants. A medium of exchange facilitates economic transactions. As long as the same money is going to be accepted as payment, inflation will not affect this function. But in extreme cases of inflation, people may lose confidence in money to the extent that they don’t trust it, and resort to barter or some other means of conducting transactions.

Another function of money is store of value. If asset prices are stable, money is unattractive as a store of value, as it brings in no income, but if asset prices are unstable it may be worth holding some part of total assets in money, as a safeguard against risk. This is the one that inflation obviously affects the most. Inflation erodes the value of money; it does not keep its value. Something that costs a certain amount today will cost more tomorrow. This affects everything from the timing of transactions to the amount required for future payments (interest rates).

One of the roles of money is to be the unit of account in which contracts are expressed and individual incomes or firms’ profits are measured. High and fluctuating rates of inflation interfere with the performance of money as a unit of account, which is believed to be bad for the efficiency and equitable running of the economy. Inflation affects this function in two ways: different prices change by different amounts during inflation, making comparisons difficult, and unstable prices makes it difficult for people to have perfect information for comparisons.

Inflation also affects another function of money known as standard of deferred payments. Standard of deferred payments means that a contract or agreement may specify (or imply) that the repayment of a debt be made using a particular monetary unit. It differs from other functions of money in that it is not functioning as an immediate medium of exchange or store of value but, rather, as a medium by which future payments will be made.

Deferred payments depend in part on price and the unit of account function of money, and in part on how well money stores value. This means that deferred payments depend on interest rates and inflation. In the preceding car-buying example, Duncan Thurly is unlikely to purchase a car with deferred payments that total ONLY $10,000. Suppose, for example, that Duncan plans to make one deferred payment a year after purchasing his $10,000 car. If the going interest rate is 10 percent, then Duncan’s deferred payment is something like $11,000.

The extra $1,000 (10 percent of the $10,000 price) is needed to compensate the seller for the interest lost when waiting a year to get paid. This 10 percent interest adjustment of the deferred payment is also dependent on inflation. A positive inflation rate (anything greater than zero) means that the interest rate is greater than 10 percent.

That is, the seller also needs to be compensated for the loss of value resulting from higher prices. Alternatively, a negative inflation rate (anything less than zero) means that the interest rate is less than 10 percent. A 5 percent annual inflation rate means that the deferred payment for this $10,000 car is approximately $11,500. This amount is the combination of the $10,000 purchase price, the $1,000 interest, and an extra $500 to adjust for the declining value of the money resulting from higher prices.

How Inflation Affects Function of Money Essay

Causes of Inflation Essay

Causes of Inflation Essay.

A sustained rise in the prices of commodities that leads to a fall in the purchasing power of a nation is called inflation. Although inflation is part of the normal economic phenomena of any country, any increase in inflation above a predetermined level is a cause of concern. High levels of inflation distort economic performance, making it mandatory to identify the causing factors. Several internal and external factors, such as the printing of more money by the government, a rise in production and labor costs, high lending levels, a drop in the exchange rate, increased taxes or wars, can cause inflation.

Different schools of thought provide different views on what actually causes inflation. However, there is a general agreement amongst economists that economic inflation may be caused by either an increase in the money supply or a decrease in the quantity of goods being supplied. The proponents of the Demand Pull theory attribute a rise in prices to an increase in demand in excess of the supplies available.

An increase in the quantity of money in circulation relative to the ability of the economy to supply leads to increased demand, thereby fuelling prices. The case is of too much money chasing too few goods. An increase in demand could also be a result of declining interest rates, a cut in tax rates or increased consumer confidence. The Cost Push theory, on the other hand, states that inflation occurs when the cost of producing rises and the increase is passed on to consumers.

The cost of production can rise because of rising labor costs or when the producing firm is a monopoly or oligopoly and raises prices, cost of imported raw material rises due to exchange rate changes, and external factors, such as natural calamities or an increase in the economic power of a certain country. An increase in indirect taxes can also lead to increased production costs. A classic example of cost-push or supply-shock inflation is the oil crisis that occurred in the 1970s, after the OPEC raised oil prices.

The US saw double digit inflation levels during this period. Since oil is used in every industry, a sharp rise in the price of oil leads to an increase in the prices of all commodities. While money growth is considered to be a principal long-term determinant of inflation, non-monetary sources, such as an increase in commodity prices, have played a key role in triggering inflation in the past four decades. Inflation has become a major concern worldwide in 2008, with global prices rises in oil, food, steel and other commodities being the culprit.

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Causes of Inflation Essay

Phillips Curve Essay

Phillips Curve Essay.

The macro economic environment is subject to fluctuation in its key variables such as rate of inflation, economic growth, levels of employment, exchange rate, trade cycles and balance of payments. Economists feel that some of these variations interact and a change in one affects the other. One unique interaction has been between unemployment rate and economic growth and the resultant rate of inflation.

Unemployment rate includes those willing and able to take up work but are not able to find any work.

They cannot be absorbed by the economy presently. Policy makers aim to lower unemployment but it is not possible to totally eliminate it as some proportions of the labor force is always between jobs. Inflation on the other hand, describes rise in general price levels. It is measured by various price indices such as CPI and GDP deflator of the economy against a base year. The higher the level of inflation the lower the purchasing power of consumers in the economy and policy makers will try to keep it as low as possible.

To lower unemployment, the government induces economic growth through fiscal and monetary policies. This increases money supply in the economy, which leads to a rise in price levels. This means that when the government undertakes to lower unemployment, inflation rises. A William Phillips first presented this trade off in 1958 when he represented the relationship on a graph, that is, the Philips curve. He plotted annual growth in wages against rate of unemployment in Britain or the period 1861-1913.

Annual
Rate of
Change
Of wages

% Unemployment (u)
(Lipsey, Richard, G, 1989: 601)

The curve is convex to the origin and negatively shaped because of the imperfect inverse relationship between unemployment and inflation. The data for the U.S from inception of the curve to 1969 reflected this relationship. However, the relationship did not hold from then to date. From 1970 inflation went up and so did unemployment thus discounting the Phillips curve.

This phenomenon is known as stagflation. Now theories come up to explain stagflation, a major one being the non-accelerating inflation rate of unemployment (NAIRU). NAIRU states that on short run Phillips curve resembles the traditional Phillips curve. In the long run, unemployment is fixed at natural rate of unemployment and the resultant Phillips curve is vertical line at that rate of unemployment.

(Manuel Eduardo, 2007)

The NAIRU states that any government action to lower unemployment below the natural employment rate only reduces unemployment in the short run before it shifts back to the natural rate. Inflation, on the other hand, goes up meaning that the new equilibrium is at a higher inflation and at the same rate of unemployment. This theory now has been discounted when a lower natural rate of unemployment was achieved in the U.S. The curve based on US data from 1960 –1998 is given below.
(DeLong, Bradford, J., 1998)
I

nflation can either be demand-pull or cost-push. Key to this analysis is cost-push inflation. Cost-push inflation results from high wages that increase the cost production, which the producer passes on to the consumers inform of high prices of the end product. The high prices reduce the purchasing power of consumers among who are workers. Their real income is depleted by the high prices and through their powerful unions they negotiate a salary raise with the producer. The higher wages again pushes up the cost of production and prices spirals upwards as the cycle is repeated. (Blanchard, Olivier, 1997: 67)

In the unemployment and inflation inverse relationship, a capitalist would prefer that inflation remains low. The capitalist would like to maximize revenue from sales and low prices would lead to higher sales. To keep the inflation rate low, he must ensure that the cost of production is low. In a labor-intensive industry, the capitalist must maintain low wage bill, which will put him on a collision course with the workers.

Low inflation would mean high unemployment rate. High unemployment guarantees an available labor pool at all times. With high unemployment rates, a capitalist will be able to blackmail workers in to accepting low wages which in turn would lead to a lower price levels. If wages were high it would lead to cost push inflation. The capitalist would prefer greater sustainability between labor and capital to ensure low cost of production and hence low cost prices.

The laborers would opt for low unemployment, which would mean high wages. Laborers would be able to negotiate with the producer for higher wages since they would not be easily replaced a jobless labor pool. This would push up the cost of production and lead to cost push inflation. But the effects of the inflation would be mitigated by high wages. If there were high unemployment rates, the laborers would be content with low wages and would absorb such increases in prices. However, for the laborers to be able to negotiate their wages up to match the rise in prices they must be highly unionized and possess unique skills that are not universal. They must also be operating in a laborer-intensive industry where labor is the main cost driver. The labor should not be easily substituted with capital as this lead to layoffs and hence greater unemployment.

The society would prefer low inflation coupled with low unemployment. However, his may not be achievable according to the Phillips curve. The society would be hurt by low inflation, as it would be accompanied by high unemployment. High unemployment leads to many social problems. On the other hand, low unemployment would drive up inflation, which would also hurt the society.

High inflation means high consumer prices, which erode the real wages of the laborers in society. The society will therefore settle for moderate rates of both inflations and unemployment. The optimal levels of both variables will be attained at minimum point of the curve. Unemployment will in the long run be at the natural rate of unemployment. To achieve this optimal level, there must comprise on both the sides of the capitalist and the laborer. Capitalist must absorb part of the increases in wages while laborers absorb part of the increase in cost of production.

Conclusion

The traditional Philips curve has undergone much transformation to reflect the relationship of between inflation and unemployment over time as it continues to loose credibility. Basing the monetary and fiscal policy on the traditional Philips curve would give erroneous results as it has been proved that low unemployment can be accompanied by low inflation.

Based on this curve, capitalists and laborers work at cross-purposes and the society provides the middle ground. However, when a capitalist opts for high unemployment, it also reduces the market available. A laborer opts for higher wages, which reduce the purchasing through higher prices. The Philips curve continues to be popular with economists and financial reporters despite its numerous shortcomings.

Reference:
DeLong, Bradford, J. The U.S. Phillips Curve: Inflation and Unemployment, 1960 to the Present, 1998. Retrieved on1/22/07 from http://econ161.berkeley.edu/multimedia/USPCurve.html
Lipsey, Richard, G. Introduction to Positive Economics. ELBS, London. Pp 601, 1989.
Manuel Eduardo. Phillips Curve For Advanced Economies On Period
1996-2007 – United States And Euro Area Case. SSRN, 2007. Retrieved on 11/22/07 from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=912772
Blanchard, Olivier. Macroeconomics, International Edition, Prentice-Hall International, N J. 67, 1997.

Phillips Curve Essay

Eid Celebration and Poors Essay

Eid Celebration and Poors Essay.

Abstract Acknowledgement We are highly grateful to almighty Allah who gave us the power to complete this report and we would also like to a very special thanks to our honorable teacher to Mr. Tahir Iqbal DIHE ,  for providing us a golden opportunity to do this research whose help , stimulating suggestions, knowledge, experience and encouragement helped us in all the times of study and analysis of the project. without whom this report was almost mpossible. It was a really good learning experience working under him.

We would also thanks to all of those who supported us in any respect during the completion of the project.

There are many traditional celebrations throughout the world. There is Christmas, Thanksgiving, and Easter. Not everyone or every culture, so to speak observes these celebrations. It depends on your background, culture, and beliefs. Every year within our culture and religion we celebrate (Eid) al Fitr. Eid is the Muslim holiday that marks the end of Ramadan, the ninth month of the Islamic calendar, the month in which the Qur’an was revealed to the Prophet Muhammad it is the month of fasting Eid is an Arabic word meaning “festivity”, while Fi? means “conclusion of the fast”; and so the holiday celebrates the conclusion of the thirty days of dawn-to-sunset fasting during the entire month of Ramadan.

The first day of Eid, therefore, falls on the first day of the month Shawwal. Eid is almost like Christmas, with family gathering, festive attires, giving of gifts, and food, this holiday is very memorable. In Pakistan, as the holy month of Ramadan comes to an end, charities and markets find themselves overcome by a burst of activity. We call ourselves Muslims, yet we don’t want to lose out on this wonderful opportunity to rip people off in the holy month of Ramazan.

We create an artificial price hike, raise the prices to double and triple to earn a windfall profit… because who knows when the chance to ‘hit the hardest where it hurts the most’ will come again. The entire nation adorns a garb of piety from the evening of the first day of Ramazan till Chand Raat. Western society has a lot to learn from us Muslims; they don’t quite understand the essence of unity, do they? Like naive creatures they actually lower their prices around Christmas time and go on a complete slash of prices right after Christmas.

These people actually want consumers to afford the luxuries of life and celebrate with their loved ones. It seems like they haven’t learnt their lessons of a capitalist society well enough. No wonder people in that part of the world live longer and are hideously obese! On Eid day and the holidays that followed, we saw numerous pictures on television channels of people celebrating the occasion in parks, on the beach and at family gatherings but this is just one face of Eid. For many others — perhaps, tens of thousands of people — Eid remained a far less festive occasion.

The parents who could not buy clothes or new shoes for their children ; nor did those unable to put together a decent meal even on this occasion. During the religious festival, the household spending touches its peak Our survey revealed that in Karachi even low income group spend nothing less than Rs1000 per person in the family. This is inclusive of all expenditures that include spending on dresses, footwear, accessories, edibles, household durables and transport. The informal survey indicated the varying composition of spending in the family budget of different social classes.

The proportion of spending on poor increases as income climbs. While in families of modest means, the Eid budget is consumed by basic needs, food, clothing, etc . Problem Statement The commencement of the month of ramadan is going to bring in not only the frenzy of the upcoming Eid festival but also something else which is increased tension and worry that is caused by the uncontrolled price hike of the daily essentials. Each year before the month of ramadan, the prices of the daily essentials increase twise or even thrice as much.

Its difficult for lower income families to manage their budget in Ramadan and Eid due to increases of prices. The poor have got poorer and those who thought that they were well off a few years ago are busy reassessing their value – something to do with fitting into the elite. , a person (unskilled worker or the people at the lowest rung such as guards, sweepers or seasonal workers) making Rs5,000 (about $75) per month living off a make- shift hutment in a shanty township (kutchi abbadi) supporting a family cannot spend his full salary on Eid shopping.

The market sources confirmed that inflation has jacked up the prices but the rise in prices of fabric, footwear and ordinary accessories is much less in percentage as compared to hike in the prices of edibles. “The food inflation is backbreaking high at 25-35 per cent. For a variety of reasons, the rates of ordinary local fabric and garments have risen marginally by 5-10 per cent”, a market analyst observed.

According to a Gilani Research Foundation Survey carried out by Gallup Pakistan, 88% of Pakistanis said their preparations for Eid suffered due to inflationary pressures. Eid is our religious festival and give the massage of sacrificing and share the joys but now days it becomes celebrate as cultural festival and we forgot this massage | | | | |Variable to be Studied | | |Independent variable: | |• Price hike | | | |Dependent variable: | | | |• Family of Middle class | |• Family of working class | |• Family of lower class | Research Hypothesis

H1:- Does the price hike affect the budget of lower income families H2:- Does the price hike affect the purchasing power of lower income families H3:- Does the price hike affect the Ramadan spending of lower income families H4:- Does the price hike affect the Eid celebrations of lower income families. H5:- Does inflation affect the Eid shopping very highly Research Objective The main objective of this research is Find out and analyze the problems which are faced by lower income families due to high inflation that how they manage their budgets specialy in Ramadan and how the celebrate their Eid with low income. Sources of Information Primary Sources:- Questionnaires Interviews

Secondary Sources:- New Articals Online Articals Websites Method Of Data Collection A self administered questionnaire interview was conducted to collect the data from the target population on basis of non probability based sampling techniques. The people belonging to above mentioned three classes will be approached for this purpose. Questionnaires were developed for the interview which were distributed in different social Classes. To obtain the relevant information, population interviewed consisted of house wives and people from all walks of life. The questionnaire was designed to measure the impact of price hike on low income families.

Likert scale was used for dependent variable different social classes independent variables price hike ranging from 1 to 5 where 1 is coded as “strongly agree” to 5 is coded as “strongly disagree”. Sampling Techniques Convenient Sampling:- Non Probability based Convenient sampling technique has been used for this purpose of data collection. Sample was taken from the Karachi city, through structured questionnaire , Instruments of Data Collection:- Close ended Questionnaire with likert scale has been used for data collection Sample Size: A total of 300 questionnaires were administered to potential respondents chosen from various areas of Karachi. A total of 250 usable questionnaires were returned, giving a response rate of 87%. Data Analyses ; Findings Discussion ; Conclusion Recommandation List Of References Apendix

Eid Celebration and Poors Essay

China’s Managed Float Essay

China’s Managed Float Essay.

The RMB is unlikely to be floated freely in the near term as the country’s economyfaces internal difficulties during its reform drive and external uncertainties of the globaleconomy, the report quoted Xia Bin, a member of the monetary policy committee of thePeople’s Bank of China (PBOC), or the central bank, as saying. To create a relatively stable exchange rate formation environment, the governmenthas to gradually open its capital market, so the RMB can not go global too soon,China moved to shift from a conventional dollar peg system to a managed floatingexchange rate system in 2005, which means the central bank now does not link theyuan only to the U. S. dollar.

China’s RMB “go global” drive requires totally free exchange of the yuan, which meansthe regulation of capital accounts should be fully opened, and that exchange rates willbe largely determined by the demand and supply in both domestic and global markets. But the country can not handle this at its current stage of economic development, Xiasaid. Xia suggested that the government should well coordinate policies concerning theexchange rate, capital management and reform while matching the reform of itsexchange rate policy with that of capital management during the RMB’s regionalizationprocess.

China’s Managed Float Essay

Assignment Essay

Assignment Essay.

Drawing on what we know about the Fisher effect, the real interest rate in both the US and South Korea is 2%. The international Fisher effect suggests that the exchange rate will change in an equal amount but in an opposite direction to the difference in nominal interest rates. Hence since the nominal interest rate is 3% higher in the US than in South Korea, the dollar should depreciate by 3% relative to the South Korean Won.

When Volkswagen decided to hedge just 30 percent of its foreign exchange exposure in 2003, the company essentially gambled that the euro would decline in value relative to the dollar.

The company hoped that by saving the cost of the commission involved in selling a currency forward, it would increase its profit margin. This strategy of course, backfired. b) The appreciation of the euro relative to the U. S. dollar took many people by surprise. Its rise has been attributed to record U. S. oreign trade deficits and pessimism about the future value of the dollar.

c) In addition to using forward contracts, Volkswagen could use currency swaps, and lead and lag payables and receivables. Answer4: The simplest solution would be to just wait until December, take the ? 400,000 and convert it at the spot rate at that time, which you assume will be $1=? 100.

In this case you would have $4,000 in mid-December. If the current 180-day forward rate is lower than 100? /$, then a forward contract might be preferable since it both locks in the rate at a better level and reduces risk. If the rate is above ? 00/$, then whether you choose to lock in the forward rate or wait and see what the spot does will depend upon your risk aversion. There is a third possibility also. You could borrow money from a bank that you will pay back with the ? 400,000 you will receive (400,000/1. 03 = ? 388,350 borrowed), convert this today to US$ (388,350/130 = $2,987), and then invest these dollars in a US account. For this to be preferable to the simplest solution, you would have to be able to make a lot of interest (4,000 – 2,987 = $1,013), which would turn out to be an annual rate of 51% ((1,013/4000) * 2).

If, however, you could lock in these interest rates, then this method would also reduce any exchange rate risk. What you should do depends upon the interest rates available, the forward rates available, how large a risk you are willing to take, and how certain you feel that the spot rate in December will be ? 100 = $1. Answer5: Your financing and operating capital are in dollars, yet many of your costs (labor) must be in peso. Your hard assets are all in peso, and their value will decline. On the other hand, if the peso depreciates, then your dollars will go further.

So perhaps doing nothing is the best approach. If you are pretty sure that the peso will depreciate, then you may want to avoid any major peso-denominated costs that you can until after devaluation. That may mean holding back on shipments if possible, and you may want any dollar-denominated purchases made before the devaluation. You may want to move any peso-denominated major accounts into dollars before the devaluation. Summary Answer1:The strong dollar in 2008 had negative impact on Caterpillar’s revenue but it had a favorable effect on Caterpillar’s costs.

Caterpillar had dramatically expanded its network of foreign manufacturing operations to protect itself against the exchange rate risk of dollar. In 2008, 102 of 237 manufactories of Caterpillar are located outside of North America. Although the revenues from operating in local currency and from exporting fell when the dollar strengthened, the costs of operating also declined, which helped to reduce the impact on profit margin. In addition, the price Caterpillar paid for inputs from foreign producers also fell. Thus, Caterpillar’s globalization strategy has reduced the impact of fluctuations in the value of the dollar on its profits.

Assignment Essay