Deflation

Deflation is decreasing in the general price level.

Deflation might be caused by decreasing in the

aggregate demand (as we know aggregate demand=

consumption+government spanding+investment+

exports - imports).

From the diagram above we can see that AD decreases

and shifts to the left and price decreases from P to P1.

Possible Economic Costs of Deflation:
-Holding back on spending: Consumers may prefer to spend

money later if they expect prices to fall further in the future.
-Debts increase: People might spend less because

the real value of household, corporate and government debt

rises when the price level is falling.
-The real cost of borrowing increases: Real interest rates will

rise if nominal rates of interest do not fall in line with prices –

another factor driving spending lower.
-Lower profit margins: Company profit margins come under

pressure unless costs fall further than final prices to consumers –

this can lead to higher unemployment as firms seek to reduce

their costs. Weaker profit margins can also have a negative effect

on stock markets because of a fall in expected profits and dividends

to shareholders
-Confidence and saving: Falling asset prices such as price deflation

in the housing market hit personal sector financial wealth and confidence –

leading to further declines in AD and a rise in precautionary savings

(the average and marginal propensity to save will tend to rise).

However deflation can also be caused by an increase

in a nation's productive potential which leads to an

excess of aggregate supply over demand.

From the second diagram above we can see that long run

aggregate supply increases and shifts to the right and price

falls from P1 to P2. This increasing of LRAS might be

caused by technological improvement or increasing in

a nation's productive potential.

In this case deflation might cause an increasing in the

country's economic growth. Consumers gets the benefit

of technology and increased competition in the form of

lower prices leading to an improvement in economic welfare.

Balance of payments

The balance of payments measures the payments that
flow between any individual country and all other countries.
It is used to summarize all international economic transactions
for that country during a particular time period, usually a year.
It is include the current account, the capital acount and the
financial account.
The current account records payments for imports and exports
ofphysical goods. Imports are the debit items and exports are
the credit items for a country. The current account also includes
the trade in service accounts (imports and exports of services
such as transport, tourism), income flows,and the current transfers
of money.
The financial account records the flows of money into and out of the
country for the purposes of investment or as deposits in banks and
financal institutions. The financial account includes the direct investment
from foreign countries in one of its branches or associated companies
in the UK and portfolio investment changes in the holding of
paper assets, such as shares. Also it includes other financial flows
such as short term monetary movement.
The capital account records the flows of funds.

Government policies

There are three types of policies: monetary and fiscal
policies which are also known as demand-side policies
and supply-side policy. Government use them to achieve
economic targets such as economic growth, reduce
unemployment, reduce inflation and of course increase trade.
So I would like to talk about each of them more detailed.

In economics, fiscal policy is the use of government spending
and revenue collection to influence the economy.
The two main instruments of fiscal policy are government
spending and taxation. Changes in the level and composition
of taxation and government spending can impact on the
following variables in the economy:

• Aggregate demand and the level of economic activity;
  
• The pattern of resource allocation;
  
• The distribution of income.

So in other word government changes the level of taxation and government expenditure to affect to the economy.

The effectiveness of fiscal policy depends on a number of factors:

• The accuracy of forecasting. Government would obviously like to act as swiftly as possible to prevent a problem of excess or deficient demand. The more reliable are the forecasts of what is likely to happen to aggregate demand, the more able will the government to be intervene quickly.
• The extent to which changes in government expenditure and taxation will affect total injections and withdrawals.
• The extent to which changes in injections and withdrawals affect national income. Will it be possible to predict the size of the multiplier and accelerator effects?
• The timing of the effects. It is no good simply being able to predict how long they will take. If there are long time lags with fiscal policy, it will be far less successful as a means of reducing fluctuations.
• The extent to which changes in aggregate demand will have the desired effects on output, employment, inflation and the balance of payments.

Discretionally fiscal policy deliberates changes in tax rates or the level of government expenditure in order to influence the level of aggregate demand. Government may use it if there is a fundamental disequilibrium in the economy or substantial fluctuations in national income. If government expenditure on goods and services (roads, health care, education) is raised, this will create a full multiplied rise in national income. The reason is that all the money gets spent and thus all of it goes to boosting aggregate demand. Cutting taxes, however, will have a smaller effect on national income. The reason is that cutting taxes increases people's disposable incomes, of which only part will be spent. Part will be withdrawn into extra savings, imports and other taxes. In other word not all the tax cuts will be passed on round the circular flow of income as extra expenditure.

Monetary policy is the process by which the government, central bank, or monetary authority of a country controls the supply of money, availability of money, and cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy. Monetary policy either can be expansionary or contractionary policy. If it is expancionary policy government use it to reduce unemployment in the period of recession by cutting interest rates. If it is contractionary it is used by the government to reduce inflation by raising interest rates.

It is impossible to use monetary policy as a main force of controlling aggregate demand. It is especially weak when when it is pulling against the expectations of firms and consumers and when it is implemented too late. However, if the authorities operate a tight monetary policy firmly enough and long enough, they should eventually be able to reduce lending and aggregate demand. But there will inevitaly be time lags and imprecision in the process. An expansionary monetary policy is even less reliable. If the economy is in the recession, no matter how low interest rates are driven, people cannot be forced to borrow if they do not wish to. Firms will not borrow to invest if they predict continuing recession. Despite these problems, changing interest rates can be quite effective. After all, they can be changed very rapidly. There are not the time lags of implementation on that there are with fiscal policy.

Supply-side policies:

• education
• training
• increase investment
• reduce the power of Trade Unions
• increase the number of small firms
• cutting of the direct taxation
• privatisation

Herzberg

Frederick Irving Herzberg (1923 - 2000) was a noted
psychologist who became one of the most famous
names in business management. He is most famous for
introducing job enrichment and the Motivation theory.

According to Herzberg motivators are:

-Achievement
-Recognition
-Work Itself
-Responsibility
-Promotion
-Growth

Demotivators are:

-Pay and Benefits
-Company Policy and Administration
-Relationships with co-workers
-Physical Environment
-Supervision
-Status
-Job Security
-Salary

Answers to your questions, Mr.Chris

1) Whether tariffs are good or bad?

At first what is a tariff? A tariff is a tax imposed on goods when they are moved across a political boundary. They are usually associated with protectionism, the economic policy of restraining trade between nations. For political reasons, tariffs are usually imposed on imported goods, although they may also be imposed on exported goods. In the other words tariifs are the taxes on imports.

When we answer to this question we should consider what are the advantages and disadvantages of having tariffs for one particular country.

Advantages:

• protest domestic industries from overseas competitors
• infant industries (young, new)
• prevent unemployment
• reduce current account deficit
• political pressure
• attract FDI (foreign direct investment)

Disadvantages:

• discourages efficiency
• inefficient allocation of resources
• increases in costs of production/cause inflation
• consumer choice is restricted/consumer surplus decreases
• retaliation/trade war

2) Why do European countries over-produce food and destroy it instead of giving to poor and starving countries?

The Common Agricultural Policy (CAP) is a system of European Union agricultural subsidies and programmes. It means that government protects domestic farmers from overseas competitors by subsidies, tariffs and quotas. They encourage them to produce more or even subsidise them for not producing anything if it is over-producing.

There are several reasons why European countries do not give over-produced food to poor countries:

• costs of transfering of the food. If they transfer it by plane, ship or car it will cost a lot of money
• there are some types food which is non-transferable, it can not be keeped for a log time
• distribution of the food might be wrong
• it will help prevent starving only for a short period of time
• local farmers might be affected by the free food from the European countries an in the long run it can make situation in the starving countries even worth than it is.

Keynesian analysis of unemployment and inflation

In simply Keynesian theory, it is assumed that there will be a

maximum level of national output, and hence real income, that

can be obtained at any one time. If equilibrium level of income

is at this level, there will be no deficienc of aggregate demand

and hence no disequilibrium unemployment.

Full-employment level of national income is the level of national

income at which there is no deficiency demand.

Deflationary gap is the shortfall of national expenditure below

national income ( and injections below withdrawals) at the

full-employment level of national income.

As you can see on the diagram above if the equilibrium level

of national income (Ye) is below the full-employment level (Yf)

there will be excess capacity in the economy and hence

demand-deficient unemployment.

The inflationary gap is the excess of national expenditure over

income (and injections over withdrawals) at the full-employment

level of national income.

As you can see on the second diagram above if at the full-employment

level of income, national expenditure exceeds national income, there

will be a problem of excess demand.

Keynesians advocate an active policy of demand management:

raising aggregate demand (for example, by raising government

expenditure or lowering taxes) to close a deflationary gap and

reducing aggregate demand to close an inflationary gap.

A little bit about Kazakhstan....

According to the Law of the Republic of Kazakhstan
the main purpose of the National Bank of Kazakhstan is
to stabilise the price level in country. Even if it was a big
pressure to the exchange rate of tenge (national currency)
the National Bank was trying to stabilise the exchange rate
and keep it as 117-123 tenge per US dollar. It helped to
control economic and financial situation. However the
National bank should take into account gold reserves of
the country and also competiveness of the Kazakhstan
producers. That's why from 4th february 2009 the
National Bank of Kazakhstan sets the new exchange rate as
150 tenge per US dollar (+/-3%).
The main causes of this changes are:

• Decreasing in oil prices. Oil is 60% of all Kazakhstan exports.
• Devaluation of currencies of other countries. For example in the period of early 2008 and january of 2009 devaluation of national currencies per US dollar was in Russia 44%, Ukraine - 53%, UK - 38%, Eurozone - 13%, Brazil - 31%, Australia - 27% and in Canada - 26%. The level of devaluation os tenge is 23% which is less than average level in other countries.
• A lot of private banks have a government support so they can operate as usual.
• Maintaining of gold reserves of country. In the period of 2008-2009 the National bank has spent 6 billions US dollars to stabilise currency market and to control the exchange rate.

The business trip

Today me and my business group went to the business trip.
We were at the city centre and were comparing prices and
competiton strategy of two competitors Covered Market,
which is on the High Street, and Gloucester Green Wednesday
Market which is on the George Street.
First of all me and Mary went to the Covered Market.
I have noticed that Covered Market is much more clean and
tidy than Gloucester Green Wednesday Market, It has four
entrances which is very useful for customers.
There are a lot of shops in the Covered Market. Most of them
are food shops, including traditional market shops selling fresh
food such as greengrocers and butchers but there are a lot of
other shops such as gift shops, bakeries and sandwich shops.
Also there are a lot of cafe and restaurants where you can have
some coffee or sandwiches.
Prices at the Covered Market are higher than at the Gloucester
Green Wednesday Market for some products but it is also cheaper
than at some big supermarkets. I haven't noticed big differences
between prices of them but maybe for some producs they are
cheaper a lot.
I think the main problem of the Gloucester Green Wednesday Market
is that it operates only once a week and it doesn't have such
good conditions as the Covered Market.

Do not take drugs...

A brick =)

1. We can use a brick to build something such as houses etc.


2. We can use it to hit somebody.


3. We can use it to hold doors if we don't want to close it.


4. We can use it to open some nuts for example walnut.


5. We can weight lifting with a brick because it is quite heavy.


6. We can use it as part of interior.


7. We can use it to put some hot sausepan or a hot dish to do not destroy your table or carpet.


8. We can put it above pieces of paper and if it will be windy your paper will not fly away somewhere.


9. We can use it to put some dirty shoes on to do not make a carpet dirty.


10. We can put a brick on a chair to make it more higher for children.


11. We can use it as a shelve for books.


12. We can write something on it.


13. We can also give it to someone else as a gift.


14. We can use it as sport equipment.For example when you are running you can run with a brick. It will be difficult but helpful.


15. Children can use it as a toy =)

Living standards

The standard of living refers to the quality and quantity
of goods and services available to people, and the way
these goods and services are distributed within a population.
It is generally measured by standards such as real income
per person and poverty rate. Also there are other measures
such as access and quality of health care, income growth
inequality, educational standards.

We take several data such as National Income Indicators,
Income distribution, Population, Health Indicators, Energy
and the environment, Education, Communications and
Distribution of GDP by sector and by demand to compare
the standards of living of Ethiopia Ghana, Indonesia, Pakistan,
Colombia, Russian Federation, Czech Republic, New Zealand,
UK and USA.

Referring to the first data which is National Income Indicators
we can see that the lowest Gross national income is in Ethiopia
and the highest in the USA but we can’t compare the standards
of living using only this data. As we can see on this data gross
national income in Indonesia is bigger than in Pakistan. However
gross national income per capita in Pakistan is much bigger t
han in Indonesia thus PPP is also bigger than in Indonesia.
This difference depends on the population as well. Population
size in Indonesia is much bigger than in Pakistan. So even if whole
gross national income is bigger in Indonesia gross national income
per head will be greater in Pakistan.

In the second data we can see that in Colombia is the highest
percentage of income distributed to people with the highest
income while people with low income have the lowest percentage
of income distribution comparing with other countries. That
means even if in Colombia gross national income is high
(comparing with Ethiopia Indonesia etc.) and PPP is also
high there is a problem of poverty. People with low income
have only 2.7% of income distribution.

The third data tells us about population. According to this
data we can see that in countries such as Ethiopia, Ghana,
Indonesia, Pakistan, Colombia percentage of young population
(0-14) is extremely high while percentage of old population (65+)
is very low. If we compare to another countries such as Russian
Federation, Czech Republic, New Zealand, UK, USA we can see
the difference between this countries. In these countries percentage
of old population is much bigger than in Ethiopia, Ghana, etc. This
might be because in industrial counties (UK, USA) people have
better standards of living and thus live longer than in emerging
economy countries.

The next data is about health indicators which are very important
in measuring standards of living. We can see from this data that
in Ethiopia and in Ghana life expectancy at birth is very low and
under-five mortality rate is extremely high. Even if population
of these counties is growing and it has a big percentage of young
population they have an enormous rate of mortality of children.
This might be because most of the population don’t have an
access to a healthcare, to safe water and to sanitation facilities.
This data is also very important in measuring standards of living
and therefore we can say that in Ethiopia and Ghana standards
of living is low comparing to the USA, New Zealand, and UK etc.

Let’s look to the next data which is about energy and the
environment. As we can see in countries such as Russian
Federation, Czech Republic, New Zealand, UK, USA energy
use per capita is very high comparing to other countries. This
can also tells us about standards of living in these countries.
The more income people have the more they will spend on
energy. Therefore if people use a lot of energy it will cause
pollution. We can see that in countries with high energy use
pollution is also high.

Education data is also very important in measuring standards
of living. As we know from definition of standards of living it
is refers to the quality and quantity of goods and services
available to people, and the way these goods and services are
distributed within a population. So standards of living also
depend on availableness of education and distribution of it
within a population. We can see on the data that in emerging
economy countries such as Ethiopia adult literacy is very low
(less than half) and percentage of children in the labour force
is high. This can be because people don’t have enough access to
education and children often go to work instead of school. As
standards of living are higher people have more chances to
get education as in the USA, UK, Russian Federation, Czech
Republic and New Zealand.

Data about communication is also important in measuring
standards of living. This tells about how communication
services such as paved roads, telephone mainlines, TV’s,
mobile phones, personal computers and Internet access
distributed within a population. As we can see countries
with low standards of living such as Ethiopia, Ghana and
Indonesia has low access to communication services comparing
to countries with rich economy.

The last data is about distribution of GDP by sector and by demand.
There are three main sectors such as agriculture, industry and
services. The more percentage of GDP distribution has service
sector the higher standards of living of country.

So there are a lot of things that we should consider when we
measure the standards of living. We can’t measure it according
to one data for example only national income statistics. We
should also consider health indicators, education, population,
communication etc. Real GDP per capita does have some
limitations when assessing the standard of living.
They are:
· Regional Variations in income and spending
· Inequalities of income and wealth
· Economic growth and externalities
· Leisure and working hours
· The balance between consumption and investment
· The black economy and non-monetised sectors.

Whahahahaha

Sorry for my enormous photo))))))))
whahahahah... I haven't seen that photo because I had some problems with my computer =)))
Anyway it was nice photo)))))

Who has gained in the recession?

At first I would like to explain what is a recession.
In economics, the term recession generally describes
the reduction of a country's gross domestic product
(GDP) for at least two quarters. In the other word
recession is two consecutive quarters of a negative growth.
Usually in period of recession everybody faces
a lot of problems but there are some sectors which may
gain from the recession.
As we know in the period of recession government is trying
to reduce interest rates to encourage people to spend more
money. So if interest rates are low people who has already
borrowed money (bank loans) may gain from the recession
because they pay less interest rates.
Also businesses that sell inferior goods such as public transports
(buses, taxis), low quality food (deliver pizzas etc.) might gain
as well in the period of economic downturn. If people have less
income demand for inferior good will rise. So this type of business
might gain from the recession.

Islam

I was really disappointed when I saw that video
about Barak Obama and Islam. I don't understand why
all americans think that Islam is an evil. It is not true!
Islam doesn't support terrorism. It is nothing to do with that.
I would like to introduce what islam actually is.
Islam means "submission to the Will of God". In its ethical sense
Islam signifies "striving after the ideal". A Muslim is one who
submits to the Will of God. "Islam" and "Muslim" derive from
the same word as the Arabic for "peace". The traditional Muslim
greeting is "Peace be into you".
Islam offers hope for salvation to the righteous and God-fearing of
all religions. Muslims believe in the Divine Revelations of many
prophets including Abraham, Moses, Jesus, Muhammad, but do not
blieve that God assumed human form. The Quran, Muslims believe,
is God's Word and Final Revelation to he Prophet Muhammad.
Revealed over a period of twenty-three years, The Quran was
complied and distributed to distant lands within twenty-five
years of The Prophet's death in 632 A.D. This is the only Quran
recognised by Muslims.
Comprising laws, moral precepts, and narratives, The Quran's
timeless text remain an inspiration and guide for more than one fifth
of humanity. Together with The Quran, the eptome of classical Arabic,
Muslims lives are guided by the examples and sayings of the Prophet.
Thousands of sayings have been attributed to The Prophet . Some are
acepted as autentic; some traced to the Prophet's companions; some
are the subject of debate. Some examples:

"The first thing created by God was the Intellect".

"The most exellent Jihad is that for the conquest of self".

"The ink of the scholar is more holy than the blood of the martyr".

"One learned man is harder on the devil than a thousand ignorant worshippers".

"Riches are not from an abundance of worldly goods, but from a contented mind".

Reflect upon God's creation but not upon His nature or else you will perish".

"He who wishes to enter Paradise at the best door must please his mother and father".

"No man is a true believer unless he desires for his brother that which he desires for himself".

"When the bier of anyone passes by you, whether Jew, Christian, or Muslim, rise to your feet".

"The thing which is lawfull, but disliked by God, is divorce".

"Heaven lies at the feet of mothers".

"Women are the twin-halves of men".

"Actions will be judged according to intentions".

"That which is lawful is clear, and that which is unlawful likewise, but there are certain doubtful things between the two from which it is well to abstain".

"The proof of a Muslim's sincerity is that he pays no attention to that which is not his business".

"That person is nearest to God, who pardons...him who would have injured him".

"...yield obedience to my successor, although he may be an Abyssinian slave".

"The creation is like God's family...the most beloved unto God is the person who does good to God's famly".

"Modesty and chastity are prts of the Faith".

Islamic Law is based upon The Quran, examples and sayings

of The Prophet, consensus among the learned, analogical

deduction, and individual reasoning. Islamic society comes

closer than any other society to the ideal democracy. All persons

are equal before God; goodness is the only criterion of worth.

There is no priesthood in Islam; even a child, with greater

knowledge of The Quran than his elders, may lead them in prayer.

To become a Muslim, one need only profess,

"There is no god but God; Muhammad is the Messenger of God".

Diptiy timeline

I have set up my own diptiy timeline.
I found it really usefull and it keeps me aware
of the latest news. I have only 2 topics. They are
business and of course economy but I will add
another topics as well. Maybe it will be an international
fashion or about international models =)))

How to start your own £100,000 a year internet business

I have read a guide which is called "How to start your
own £100,000 a year internet business".
It is quite interesting stuff. There are a lot of ways
of making money on Internet and there are some
advices how to start up.
At first we should focus on the market and marketing
methods not on the product that we are going to sell.
Making fantastic cash from the web has got virtually
nothing to do with the products you sell.
Then we should find a niche market but it should be
not too small.
Next step. Your product should be easy to order and deliver.
If it is an informarion product that is great! You don't
have to deliver anything, your customer can simply download
it.
Also we should look at this site: http://www.keyworlddiscovery.com/
where we can type any word and see how many people search for
it each month on the internet. It is also recommend targeting people
who want health/wealth/happiness.
Your website shouldn't look like you are a large corporation.
People don't like it.
Your website has one main purpose (and only one): to sell stuff.
So you should be honest and direct with your customers.

So, to be absolutely clear, here’s what to avoid:
• Logos
• Drop-down menus
• Fancy graphics
• Animations
• Sound

So I think it is really useful guide for people who would
like to start up their own business on Internet.

Million Dollar Blogger

Alborz Fallah has created one of the Australia's
most famous blogs which is now become a website.
Al started to blogging after his friend's advices.
He started with three blogs and then decided to
focus only on one of them which was about cars.
This blog was the most famous and profitable and
also Al was intrested in this paticular area. Now his
business become very successfull beacause of
advertiement company.
He started with Adsense. As he said it was the best to
start with and his company got up to around $5000
a month. He has four full-time staff and two part-time
staff. He managed to get himself signed up to an
advertising agency which pays him 10 cents per
unique browse that he delivers.
However Alborz's company has a lot of competitors
but still his business is a good example of successfull
blogger. Even if he was doing blogs he had a full-part
time job!

Is Internet Explorer a monopoly?

What is a monopoly?

There are several meanings of the term monopoly:

• A pure monopolist in an industry is a single seller.

It is quite rare for a firm to have a pure monopoly –

except when the industry is state owned and has a legally

protected monopoly position.

• A working monopoly: A working monopoly is any

firm with greater than 25% of the industries' total sales.

• An oligopolistic industry is characterised by the

existence of a few dominant firms, each has market

power and which seeks to protect and improves its

market position over time.

• In a duopoly, the majority of market sales are

taken by two dominant firms.

(Source tutor2u.net)

Also there are some characteristics of a monopoly

such as barriers to entry (patents, branding etc).

Internet Explorer has 80% of the market and

there are a lot of barriers to entry for Google's

Chrome such as advertising and branding. Internet

Explorer has his own well-known brand and it might

be really hard for Chrome to enter to this market and

to compete successfully.

However Google has also well-known brand but not in

the web browser market and I think Google's brand

might compete with Microsoft.

Mnemonics! =P

AIDANA

Advertising
Idea
Distribution
Accounting
Net profit
Assets

How to keep Generation Y motivated?

Nowadays there are a lot of young employees in
companys. Is it good? What are the benefits of it?
How to motivate them?
I have listened to Financial Times podcast about
Generation Y. Who are they? Generation Y is
a young population who were born in 1977 to 1994.
It is really good to employ Generation Y because
there are a lot of benefits. Generation Y is highly
enthusiastic, they can spend sleepless nights
on their work (if they are well motivated),
they have a lot of new ideas. But how to keep them
motivated? Gen Y is looking for learning opportunities
and also for career that young person can develop in.
They would like to be challenged. The company should
provide them goals and give, for example, names of
people who might help them with theirs work and the
employers might be surprised with new ideas.
However there are some disadvantages of motivating
Gen Y. As we can listen in the podcast Generation Y is
absolutely unmanagable. They might take an ideas in
different directions and just take their own decisions.