Energy drink case Research Paper Example | Topics and Well Written Essays - 1750 words

Energy drink case - Research Paper Example It is, therefore, feasible to posit that market positioning of alternative beverages is largely dependent on product differentiation. Just like in production of carbonated drinks, principal sellers in alternative soft drinks industry are globally renowned beverage manufacturers like PepsiCo and Coca-Cola (Barr & Hajela, 2013). This is ascribable to the fact that the two companies already had strong brands in the beverage industry before venturing into the provision of alternative beverages. Nonetheless, other beverage manufacturers like Hansen Natural Corporation, which produces Monster Energy and Red Bull GmbH, have succeeded in building recognized brands, while gaining a considerable share of the potent alternative beverage industry. Even though the latter industry was projected to sustain the steady growth observed previously, it suffered a setback following the 2008 financial recession. Unfavorable economic conditions impeded consumers’ buying capacity thus resulting in a significant decline in sales, particularly those of highly-priced alternative beverages. All the same, industry analysts foresee improvement in sales of alternative soft drinks with time, as carbonated drinks consumers progressively shift their preference towards the relatively new beverage category. Competing companies in this industry can only increase their chances of success depending on their readiness to match volatility of consumer trends, capacity to build brand loyalty, willingness to adopt innovation, and ability to increase distribution and marketing channels, among other distinctive strategies. Global beverage organizations like PepsiCo and Coca-Cola are focusing on reversing the major decline of carbonated by venturing into production of alternative beverages. These organizations have expanded their market presence by introducing vitamin drinks, sports drinks, and energy drinks in the international market (Esterl, 2013). Additionally,

305 Essay Example | Topics and Well Written Essays - 1000 words - 1

305 - Essay Example It will also increase efficiency because the front desk will only use automated services to communicate with the other departments. It will also ensure surveillance so that workers at the front-desk department do their responsibilities without wasting time. The front-desk department at the organization has for a long time been ineffective creating losses for the company because of a waste of time. The main issue regards doing things manually at the reception. The company secretaries do not use any machine that links the department to other departments within the company. The only machine in the front desk area is a computer that is only used to record customer visits when they come to the company and employee attendance every morning when they report to work. The front desk is supposed to receive customers and potential clients, listen to their concerns and send them to the relevant departments for help or service. However, customers and employees have reported that the front-desk is very slow in their responsibilities, ignore their duties and are ineffective. The source of this problem is that the front desk lacks automated systems that could have helped the department to make the processes fast and be reliable. Because of this, employees at the department are forced to walk to other departments in search of important documents or to seek clarification over important matters that may not be appropriate for phone calls. This has seen some employees take up to 30 minutes when going to take important documents. They waste time along the way, tell stories during work time and deliberately take time to avoid doing much work. In addition, simple tasks that require a phone call to other departments are ignored. Instead of making the calls, the employees deliberately walk out of their working area pretending that they need to go and find such information physically. These problems have increased inefficiencies within the

A research strategy for a topic of security risk analysis Essay

A research strategy for a topic of security risk analysis - Essay Example The researcher states that it is necessary to understand the importance of conducting quantitative research within the information security field to become familiar with the challenges one faces when addressing an issue in question. Besides, to have a clear picture of the challenges in quantitative research methods, a research strategy must be evaluated to determine the pros and cons related to sampling, validity, reliability, and bias during a study. In fact, the evaluation of each criterion within a hypothetical study will include the use of online survey research to collect data from participants without the need for additional investment in hardcopy materials and travel expenses. Therefore, to become familiar with the challenges of quantitative research using an online research methodology, the sampling, validity, reliability, and bias will be analyzed by selecting a strategy to conduct a hypothetical study on security risk management. This will determine the viability of the onl ine survey strategy in the information security field. The viability of the online survey methodology will depend on internal and external factors during the process of research management. Before selecting and implementing a research method during an information security study, it is necessary to understand the research question and then define the hypothesis to determine the direction of the research. The direction of the research will be determined by the topic under investigation, thus establishing a clear strategy to obtain the necessary data needed to complete the study. As disclosed by Cook and Cook (2008), the research design will be based on the research question, so that the study will be able to answer the main hypothesis. Then the data gathering must be elaborated on using quantitative research methods based on the variables illustrated in the hypothesis. Indeed, using quantitative research methods will allow the researcher to present the results of the data collected us ing statistical displays to make a correlation between the dependent and independent variables being studied. Before the selection of a research methodology, internal and external validity must be considered before adopting an instrument. Nevertheless, before making a final decision on the preferred instrument, well-defined research questions must be formulated. The research questions must be related to the main hypothesis to acquire the best results and to illustrate the importance of quantitative research within the topic being studied. The research questions must address the purpose of the data to be collected corresponding to all independent variables to understand the behavior of the dependent variable. For this reason, if a study titled â€Å"Security controls as a tool of security risk management in business revenue† will be conducted to understand the reliability of security controls in protecting business revenue, the research question will be â€Å"Are security con trols reliable in protecting the business revenue†. The dependent variable is business revenue and the independent variable is reliability of security controls. The research hypothesis is that security controls are reliable for protecting business revenue. This will give a direction to the research. Indeed, the development of an instrument and the implementation of a research method will be based on the research questions to be asked to the targeted population to acquire a

Line Between Tough Love and Child Abuse Essay Example for Free

Line Between Tough Love and Child Abuse Essay Poets and authors have tried to define love for centuries, whereas scientists have only recently started. Many of us know intuitively that love is a major purpose for living; (Blueprint, 2013) that connection is inherent in all that we do, and without love, we cannot survive as a species. But what is love, and how do we know when were in it? First , lets start off with what love isnt. If someone asks you to do or say something that isnt in your nature, that isnt true love. Smith, 2002) Although love does involve compromises between partners, someone who is in love with you will never ask you to change who you are in order to be loved. True Love is caring. The ancient Greeks had many different names for different forms of love: passion, virtuous, affection for the family, desire, and general affection. But no matter how love is defined, they all hold a common trait: caring. (Blueprint, 2013) True Love is attractive. Attraction and chemistry form the bond that allows people to mate. Without this romantic desire for another individual, a relationship is nothing more than lust or infatuation. True Love is attached. Like the mother-child bond, attachment comes after the initial attraction. Attachment is the long term love that appears anywhere from one to three years into a romantic relationship (sometimes sooner and very rarely after), and youll know youve found it when you can honestly say, (Smith, 2002) Ive seen the worst and the best you have to offer, and I still love you, while your partner feels the same way. True Love is committed. When it comes to true love, commitment is more than just monogamy. It’s the knowledge that your partner cares for you and has your back, no matter what the circumstances. People who are strongly committed to one another will, when faced with seemingly negative information about their partner, see only the positive. For example, a friend comments that your partner doesnt say a lot. Ah yes, hes the strong, silent type, you reply. People with less commitment to their partner would instead say something like, Yeah, I can never have conversation with him. It’s annoying. True Love is Intimate. Intimacy is a crucial component of all relationships, regardless of their nature. In order to know another, you need to share parts of yourself. This self-revealing behavior, when reciprocated, (Teicher, 2000) forms an emotional bond. Over time this bond strengthens and even evolves, so that two people merge closer and closer together. Intimacy by itself if is a great friendship, but compiled with the other things in this list, it forms an equation for true love. Within the minimum standards set by CAPTA, each State is responsible for providing its own definitions of child abuse and neglect. Most States recognize four major types of maltreatment: physical abuse, neglect, sexual abuse, and emotional abuse. Although any of the forms of child maltreatment may be found separately, (Blueprint, 2013) they often occur in combination. In many States, abandonment and parental substance abuse are also defined as forms of child abuse or neglect. The examples provided below are for general informational purposes only. Not all States definitions will include all of the examples listed below, and individual States definitions may cover additional situations not mentioned here. Physical abuse is no accidental physical injury (ranging from minor bruises to severe fractures or death) as a result of punching, beating, kicking, biting, shaking, throwing, stabbing, choking, hitting (with a hand, stick, strap, or other object), burning, or otherwise harming a child, that is inflicted by a parent, caregiver, or other person who has responsibility for the child. Perry, 2002) Such injury is considered abuse regardless of whether the caregiver intended to hurt the child. Physical discipline, such as spanking or paddling, is not considered abuse as long as it is reasonable and causes no bodily injury to the child. Neglect is the failure of a parent, guardian, or other caregiver to provide for a childs basic needs. (Perry, 2002) Neglect may be physical (failure to provide necessary food or shelter, or lack of appropriate supervision), medical (e. g. failure to provide necessary medical or mental health treatment), educational (e. g. , failure to educate a child or attend to special education needs), or emotional (e. g. , inattention to a childs emotional needs, failure to provide psychological care, or permitting the child to use alcohol or other drugs). These situations do not always mean a child is neglected. Sometimes cultural values, the standards of care in the community, and poverty may be contributing factors, indicating the family is in need of information or assistance. Teicher, 2000) When a family fails to use information and resources, and the childs health or safety is at risk, then child welfare intervention may be required. In addition, many States provide an exception to the defi nition of neglect for parents who choose not to seek medical care for their children due to religious beliefs that may prohibit medical intervention. Sexual abuse includes activities by a parent or caregiver such as fondling a childs genitals, penetration, incest, rape, sodomy, indecent exposure, and exploitation through prostitution or the production of pornographic materials. Sexual abuse is defined by CAPTA as the employment, use, persuasion, inducement, enticement, or coercion of any child to engage in, or assist any other person to engage in, any sexually explicit conduct or simulation of such conduct for the purpose of producing a visual depiction of such conduct; or the rape, and in cases of caretaker or inter-familial relationships, statutory rape, molestation, prostitution, or other form of sexual exploitation of children, or incest with children. Emotional abuse (or psychological abuse) is a pattern of behavior that impairs a childs emotional development or sense of self-worth. This may include constant criticism, threats, or rejection, as well as withholding love, support, or guidance. Emotional abuse is often difficult to prove and, therefore, (Teicher, 2000) child protective services may not be able to intervene without evidence of harm or mental injury to the child. Emotional abuse is almost always present when other forms are identified. Abandonment is now defined in many States as a form of neglect. (Perry, 2002) In general, a child is considered to be abandoned when the parents identity or whereabouts are unknown, the child has been left alone in circumstances where the child suffers serious harm, or the parent has failed to maintain contact with the child or provide reasonable support for a specified period of time. Tough love simply means that if your child decides to do anything that can harm him/her or others that you have to love your child enough to take a stand against that behavior. If this means that you have to report your child to the authorities, whether the law or teachers, then you need to do it. It also means that if you find that you need help with your child for whatever reason that you should ask for it. There is nothing shameful about having a child who is out of control. It happens to the best of parents. What would be shameful is not to do anything. The fastest and best way to implement tough love techniques with your child is to simply start making them fully responsible for their own actions. (Blueprint, 2013) Don’t pay or legal representation, don’t bail them out with teachers, and don’t interfere in the natural consequences that may happen. Sometimes, you may even need to go further in the case of a child putting others in danger via drinking or drugging and driving. Take the car, take the money, take the phone, remove all privileges, and if that doesn’t work, you may have to call the police on your child who is pract icing illegal behaviors. Don’t give multiple warnings and threats. (Teicher, 2000) Teenagers just stop believing you, if you don’t back up your words with actions. Giving natural consequences a push in the right direction can go far in helping your child, while you’re still there for emotional support as long as they’re doing the right thing, can help a child straighten their life out before they are on their own. Child abuse is more than bruises and broken bones. While physical abuse might be the most visible, other types of abuse, such as emotional abuse and neglect, also leave deep, lasting scars. The earlier abused children get help, the greater chance they have to heal and break the cycle—rather than perpetuate it. By learning about common signs of abuse and what you can do to intervene, you can make a huge difference in a child’s life. While physical abuse is shocking due to the scars it leaves, not all child abuse is as obvious. Ignoring children’s needs, putting them in unsupervised, dangerous situations, or making a child feel worthless or stupid are also child abuse. Regardless of the type of child abuse, the result is serious emotional harm. An estimated 905,000 children were victims of child abuse or neglect in 2006 (U. S. Department of Health and Human Services, 2008). While physical injuries may or may not be immediately visible, abuse and neglect can have consequences for children, families, and society that last lifetimes, if not generations. The impact of child abuse and neglect is often discussed in terms of physical, psychological, behavioral, and societal consequences. In reality, however, it is impossible to separate them completely. Physical consequences, such as damage to a childs growing brain, can have psychological implications such as cognitive delays or emotional difficulties. Psychological problems often manifest as high-risk behaviors. Depression and anxiety, for example, may make a person more likely to smoke, abuse alcohol or illicit drugs, or overeat. High-risk behaviors, in turn, can lead to long-term physical health problems such as sexually transmitted diseases, cancer, and obesity. This factsheet provides an overview of some of the most common physical, psychological, behavioral, and societal consequences of child abuse and neglect, while acknowledging that much crossover among categories exists. The immediate emotional effects of abuse and neglect—isolation, fear, and an inability to trust—can translate into lifelong consequences including low self-esteem, depression, and relationship difficulties. (Teicher, 2000) Researchers have identified links between child abuse and neglect and the following: In one long-term study, as many as 80 percent of young adults who had been abused met the diagnostic criteria for at least one psychiatric disorder at age 21. These young adults exhibited many problems, including depression, anxiety, eating disorders, and suicide attempts (Silverman, Reinherz, amp; Giaconia, 1996). Other psychological and emotional conditions associated with abuse and neglect include panic disorder, dissociative disorders, attention-deficit/hyperactivity disorder, post-traumatic stress disorder, and reactive attachment disorder (Teicher, 2000). The National Survey of Child and Adolescent Well-Being recently found children placed in out-of-home care due to abuse or neglect tended to score lower than the general population on measures of cognitive capacity, language development, and academic achievement (2003). Children who are abused and neglected by caretakers often do not form secure attachments to them. These early attachment difficulties can lead to later difficulties in relationships with other adults as well as with peers (Morrison, Frank, Holland, amp; Kates, 1999). Not all victims of child abuse and neglect will experience behavioral consequences; however, child abuse and neglect appear to make the following more likely: Studies have found abused and neglected children to be at least 25 percent more likely to experience problems such as delinquency, teen pregnancy, low academic achievement, drug use, and mental health problems (Kelley et al. , 1997). A National Institute of Justice study indicated being abused or neglected as a child increased the likelihood of arrest as a juvenile by 59 percent. Abuse and neglect increased the likelihood of adult criminal behavior by 28 percent and violent crime by 30 percent (Widom amp; Maxfield, 2001). Research consistently reflects an increased likelihood that abused and neglected children will smoke cigarettes, abuse alcohol, or take illicit drugs. According to the National Institute on Drug Abuse, as many as two-thirds of people in drug treatment programs reported being abused as children (2000).

Main Cause Of Environmental Issues In China Environmental Sciences Essay

Main Cause Of Environmental Issues In China Environmental Sciences Essay Population problems are one of the worlds most important social problems, and they are the cores of many contemporary social problems. Also, population problems are closely connected to environmental issues, and the earth is threatened by them. There are different kinds of population problems which China is facing now, and the problems of Sole child policy have begun to show: First, the overpopulation problem; second, the population aging problem; third, the decline of population quality problem. The statistics show that China has the biggest population in the world, and there are probably 1.3 billion people in China. In addition, the speed of population growth is amazing that the average annual growth rate is up to 0.57%. Large population and weak carrying capacity are the basic national conditions of China at this stage, and it is difficult to change in a short time. The population problem is a long-term problem in the primary stage of socialism in China, and it may lead to limited resources, less sustainability of the earth, and the poorer population quality. These results are all main causes of environmental issues in China, and the Chinese government has paid attention on these problems. Why China has too much population? The first reason is that China has low cost of having children. The lower cost of having children in the place, there will be the higher density of population. The geographical feature in China is that the western part is high, and the eastern part is low. The highest Tibetan Plateau in the western region has average 4,000 meters of altitude above sea level, and to the eastern coastal areas, it is less than a few hundred meters. This terrain condition is affected by Pacisic monsoon, which makes the rains concentrate on May to December. Also, the growth of crops needs moisture and temperature, and May to December in China has both heat and rain in the same period, these make China suitable for food planting, especially for the cultivation of high-yielding rice. In such areas suitable for the cultivation of rice, there will be more grain output in the same proportion. Using food as a unit of account to calculate, China has a lower cost of dependents. Therefore, a larger number of depen dent will make the population density be larger. The secondly reason can be that China has different cultures and different religions. Ancient Chinese thought that no offspring was a big problem, and in order to carry on the family line, they needed early marriage and childbearing traditions. Also, they were desired for sons, and they would not stop having babies until a son was born because they thought sons could support the parents when they got old. In addition, there can be another religious factor such as the East Asian religions restrict abortion. These directly cause that each family has many children, which is a basis of overpopulation in China today. The third reason of why there are many people in China is that after the liberation, medical conditions greatly improved, and the survival rate of babies was highly improved. Also, Chairman Mao in that period suggested that more people would have more power because of the demand of labor for the technology backward and lack of military power that time. In brief, these three reasons show that China has a huge population base, and with the growth of the population every year, it leads to overpopulation in China, which results in a series of environmental issues now. Why overpopulation in China causes environmental issues? With the growth of population and the improvement of product tools, the depth and breadth of the usage of the nature are perpetually expanded, and humans interference on ecological environment is bigger and bigger. When peoples business activities reverse natural original balance and coordination, and the nature cannot make up itself for the damage by human activities, there will be a series of ecological environmental issues. It can be reflected through many aspects such as limited resources, serious pollution, and decease in biodiversity. Because the population is becoming bigger, the demand of industry for resources and economy in China is becoming bigger. However, the industry is like a double-edged sword, and at the same time it brings prosperity and civilization, it also brings negative effects. Due to various reasons, Chinas not very large industry destroys natural ecosystems, and increases environmental pollution. From a domestic perspective, as city as a center, the range of environmental degradation is still expanding; soil erosion and desertification degree aggravated; resource destruction and waste is widespread, and some important resources gap gradually widened. Environmental pollution and degradation become one of the main factors restricting the sustainable development of Chinas economy and threatening the health of people. In 2002, the worlds forest coverage rate is 31.3%, but China is only 14%. Due to the irrational use of pasture, the grassland shows degradation, desertification, and salinization trends, and the average grass yield decreased by 30%-50%. In the arid and semi-arid areas, precipitation is far below evaporation, and vegetation is sparse and the ecology is fragile. The mild human activity is likely to lead to land degradation and desertification. China is one of the worlds most serious soil erosion countries, and serious soil erosion and desperate short of water resources eventually led to the devastating floods and Southwest drought in 2010. In northern China, the desert, Gobi, and desertified lands have reached 1.54 million square kilometers, accounting for 16% of the total land areas. Also, the biodiversity is continuously decreased. According to Stancheva, she said that: All of the previously described effects of overpopulation on the environment lead to the destruction of the natural habitat of many wildlife species (Stancheva). Chinas biodiversity is very rich, and higher plants and biological species account for 10% of the world. However, biodiversity is under a double threat from population growth and environmental degradation. Nearly half a century, China has more than 1,000 kinds of species extinction, which include about 200 species of higher plants. 15%-20% of plants and animal species are endangered, including about 4,600 species of higher plants and 400 kinds of wild animals. In addition, because of overpopulation, the industry activities become more important, which brings population. The air pollution is very serious, and the quality of atmospheric environmental in more than 500 cities cannot reach international standards. The pollution comes mainly from coal-fired release of carbon dioxide, sulfur dioxide, smoke, dust pollution, and automobile exhaust pollution. In addition, the quality of water environment is deteriorating due to industrial wastewater discharge. The levels of pollutants in the water environment is far more than national quality standards, even infiltrating contaminated groundwater, which leads to the situation that local residents have no water to drink. Also, the emissions of solid waste are increasing, but the treatment rate and comprehensive utilization rate is not high. Finally, the noise pollution in the city becomes a major hazard. National regional environmental noise pollution rate is among the highest in the world. In general, higher demand for industry activities causes a series of environmental problems such as the lost of forest, the soil erosion, the decrease in biodiversity and pollution. Also, higher demand for industry activities is a result of overpopulation. Therefore, overpopulation is an indirect factor of environmental problems. The solutions for environmental problems caused by overpopulation The first solution is that accelerate the progress of science and technology to improve the sustainability. The government must enhance Chinas resources alternative capacity and ability to regenerate; the government also needs to enhance the assimilative capacity of the environment to reduce waste emissions. The second solution is improving education and health situation, and enhancing peoples quality. Environmental issues are very close to peoples quality problems, and sustainable development requires changing the traditional values of the environment to make everyone shoulder the responsibility to promote human harmony with the environment. The third solution is insisting on the national policy of family planning to reduce the burden on the environment. It is necessary to strict control of population growth, and to make the population growth rate in the level of which economic power and the supply of resources can withstand. The final solution can be improving resource utilization and reducing resources wasted. To conserve resources not only needs to reduce waste of resource consumption, but also must reduce the waste of resource development. At present, China has a serious waste in resource development. Also, strengthening the management of resources and improving resource utilization are an important part of the coordination of relations between people and lands. In conclusion, overpopulation is one of Chinas population problems, and if the government and people do not pay attention on it and do not have some solutions for it, there will be a huge damage to the environment.

Humanistic Perspective on Personality Essays -- Psychology Carl Rogers

The humanistic perspective on personality deals exclusively with human behavior. Humanistic psychologists believe that human nature includes a natural drive towards personal growth, that humans have the freedom to choose what they do regardless of environmental factors, and humans are mostly conscious beings and are not controlled by unconscious needs and conflicts. They also believe that a person's subjective view of the world is more important than objective reality. Two of the humanistic theorists that have made an impact of humanism are Carl Rogers and Abraham Maslow.   Ã‚  Ã‚  Ã‚  Ã‚  When thinking about my personality in regard to different personality theories, I felt that I could most relate to the humanistic theory. Carl Rogers described self-concept as a collection of beliefs about one's own nature, unique qualities and typical behavior. My self-concept is that I'm an easy-going, nice guy. If something happens that upsets me, I am pretty laid back about it and deal with it gradually. I like the fact that I'm easy going, and I don't want to suddenly start showing a temper or overreacting about things that I know I can get past calmly. Rogers also stressed the fact that our self-concept may not always be accurate. I like to think that I'm an intelligent human, but when others see my transcript, for example, they may think otherwise. But, on the other hand, when I am in a situation that I know a lot about, like hunting, another might think I am very intelligent. Others' view...

Ecn 204 Final Exam Notes

Macro Final Exam Chapter 10: The Money Systems What assets are considered â€Å"Money†? What are the functions of money and the types of money? * W/o money, trade would require barter > Exchanging one good/service for another * unlikely occurrence that two people e/ have a good that other wants * 3 functions * Medium of exchange: an item buyers give to sellers when they want to purchase g/s * Unit of account: the yardstick ppl use to post prices & record debts * Store of value: an item ppl can use to transfer purchasing power from the present to the future * 2 kinds Commodity money: commodity with intrinsic value, i. e. gold coins * Fiat money: money w/o intrinsic value, used as money b/c of gov’t decree, i. e. dollar bills * Money in Can’n economy * Money supply (Money stock): the quantity of money available in the economy * Two assets should be considers: * Currency: the paper bills & coins in the hands of the general public * Demand deposits: balances in bank accounts that despositors can access on demand by writing a cheque/using debit card * Money Supply = currency + depositsWhat is the bank of Canada and its role? How do Banks create money? * Central Bank: an institution designed to regulate the money supply in the economy * Bank of Canada: the central bank of Canada * Established in 1935, nationalized in 1938, owned by Can’n gov’t * Managed by board of directors appointed by minister of Finance, composed of: governor, the senior deputy governor (7 yr terms), 12 directors (3 yr terms) * Four primary functions: * Issue currency, act as banker to commercial banks & Can’n gov’t, control money supply * Commercial Banks and Money Supply Although Bank of Canada alone is responsible for Canadian monetary policy, the central bank can control the supply of money only through its influence on the entire banking system * Commercial banks include credit unions, caisses populaires, and trust companies * Commercial banks can influence the quantity of demand deposits in economy and money supply * Reserves: cash that commercial banks hold * Fractional banking system > Keeps fraction of deposits as reserves, rest is loaned * Banks may hold more than this minimum amt if they choose * The reserve ratio, R Fraction of deposits that banks hold as reserves * Total reserves as % of total deposits * Bank T-account * T-account – simplified accounting statement that shows bank’s Assets & liabilities * Banks liabilities: deposits(what we put in the bank), Assets: Loans and reserves(What bank keeps) * R= Reserves/Deposits * Banks & money supply * $100 of currency is in circulation, determining impact on money supply: Calculate in 3 different cases * No banking system Public holds the $100 as currency; Money supply= $100 * 100% reserves banking system: banks hold 100% of deposits as reserves make no loans * MS = Currency (loans) + deposits = 0 +100 = 100 * Bank does not affect size of money supply * Fractional reserve banking system * R=10%: Reserves: 10, Loans: 90, Deposits: 100 * MS= $190 * When banks make loans > create money * Borrower gets: 90 in currency(asset), 90 in new debt/loan (liability) * Money Multiplier: The amt of money the banking system generates with each dollar of reserves * Money multiplier = 1/R R =10, 1/R = 10, 100 x 10 = 1000 * The Bank of Canada’s tools of Monetary Control * 1. Open-market operations * When it buys gov’t bonds from/ sells to the public * Foreign exchange market operations: when it buy/sells foreign currencies * MS increase when bank of Canada buys foreign currency with Canadian Currency; and decrease when BoC sells foreign currency * 2. Changing the overnight rate * Central banks act as bankers to commercial banks Bank rate : interest rate charged by bank of Canada on loans to the commercial banks * Since 1998 Bank of Canada as allowed commercial banks to borrow freely at the bank rate, paid commercial banks the bank rate , minus half percent, on their deposits at bank of Canada * Commercial banks never need to pay more than bank rate for short term loans, b/c they can always borrow from the Bank of Canada instead * Conversely, commercial banks never need to accept less than the bank rate, minus half a percent, when they make short-term loans, because they can always lend to the bank of Canada instead * Overnight rate: the interest rate on very short-term loans between commercial banks * Bank of Canada can alter the money supply by changing the bank rate, which in turn causes an equal change in overnight rate * A higher bank rate discourages commercial banks from borrowing from the Bank of Canada * A higher overnight rate discourages commercial banks from borrowing from other commercial banks * An increase in the overnight rate reduces the quantity of reserves in the banking system, which in turn reduces the money supply * Bank of Canada’s control of MS is not precise * Bank of Canada must wre stle w/ 2 problems that come from fractional-reserve banking * Does not control amt of money that: * Household choose to hold as deposits in banks * Commercial bankers choose to lend Chapter 11: Money Growth and Inflation How does the money supply affect the inflation & nominal interest rates? * Quantity theory of money: Price rises when gov’t prints too much money * Most economists believe the quantity theory is a good explanation of the long run behavior of inflation * Asserts that quantity of money determines value * 2 approaches: * Supply demand diagram MS determined by bank of Canada, banking system, consuers * In model, assume that BoC precisely controls MS & sets it at some fixed amt * MD (money demand) how much wealth ppl want to hold in liquid form * Depends on P: an increase in P reduces the value of money, so more money is required to buy goods & services * Thus: Quantity of money demanded is –vely related to the value of money +vely related to P, other thin gs equal (real income, interest rates, availability of ATMs) * * Results from Graph: Increasing MS causes P to rise * How does this work? Short version: * AT the initial P, an increase in MS causes excess supply of money * People get rid of their excess money by spending it on goods & services/ by loaning it to others who spent it * Result: increased demand of goods But supply of goods does not increase, so prices must rise * Other things happen in the short run, which we will study in later chapters) * Equation * Nominal Variables: are measured in monetary units * i. e. Nominal GDP, nominal interest rates (rate of return measured in $) nominal wage($ per/hour worked) * Real Variables: are measured in physical units * i. e. real GDP real interest rate (measured in output) real wage (measured in output) * Real vs. Nominal * Prices are normally measured in terms of money * Price of a compact disc: $15/cd * Price of a pepperoni pizza: $10/pizza A relative price: price of one good relat ive (divided by) another: * Relative price of CDs in terms of pizza: * Price of CD/Price of pizza = 15/10 = 1. 5 pizzas per cd * Relative prices are measured in physical units so they are real variables * Real vs. Nominal Wage * An important relative price is the real wage * W= nominal wage= price of labour $15/hr * P = price level = price of g&s $5/unit of output * Real wage is price of labour relative to price of output * W/P = 15/5 = 3 units output per hour * Classical theory of inflation: * Increase in overall level of prices * Over past 60 yrs, prices risen on avg of 4%/yr Deflation: people will wait for prices to drop on big ticketed items, dropped in the 20th century * In 1970s prices rose by 7%/yr * During 1990s, price rose at 2%/yr * Hyperinflation: extraordinary high rate * Quantity theory of money: explain long-run determinants of price lvl and inflation rate * Inflation is an economy-wide phenomenon that concerns the value of the economy’s medium of exchange * Whe n the overall price level rises, value of money falls * Inverse relationship b/w price & value of money * Value of money: * P = Price lvl (CPI/ GDP deflator) * P = price of basket of goods measured in money * 1/P is value of $1, measured in goods * Example: basket contains one candy bar, P = $2, Value of $1 is ? candy bar * The Classical Dichotomy Classical dichotomy: theoretical separation of nominal & real variables * Hume & the classical economists suggested that monetary developments affect nominal variables but not real variables * If the central bank doubles the MS, Hume & classical thinkers contend * All nom variables (including prices) will double * All real variables (Including relative prices) will remain unchanged * The neutrality of Money * Monetary neutrality: the proposition that changes in the MS do not affect real variables * Doubling money supply causes all nominal prices to double, what happens to relative prices? * Initially, relative price of cd in terms of pizza is * Price of cd/price of pizza = 15/10 = 1. pizzas per cd * After nominal prices double * 30/20 = 1. 5 pizza per cd * Relative price is unchanged * Monetary neutrality: proposition that changes in the MS do not affect real variables * Similarly, the real wage W/P remains unchanged, so†¦ * Quantity of labour supplied/demanded, total employment does not change * The same applies to employment of capital & other resources * Since employment of all resources in unchanged, total output is also unchanged by the MS * Most economists believe the classical dichotomy & neutrality of money describe the economy in the long run Does the money supply affect real variables like real GDP or the real interest rate? The velocity of Money: the rate at which money changes hands * Notation: * PxY = nominal GDP = price level x real GDP * M = money supply * V = velocity * Velocity formula: V = PXY/M * Pizza, Y = real GDP = 3000 pizzas, P= price of pizza = $10, P*Y = $30,0000, M = $10,000 * V=30,000 /10,000= 3, avg dollar was used in 3 transactions * Quantity Equation * M*V = P*Y * V = stable * So, a change in M causes nominal GDP (P*Y) to change by the same % * A change in M does not affect Y: money is neutral, Y is determined by tech & resources * So, P changes by the same % as P*Y and M * Rapid money supply growth causes rapid inflation How is inflation like a tax? Hyperinflation is generally defined as inflation exceeding 50%/month * Excessive growth in the MS always causes hyperinflation * Inflation tax: * When tax revenue is inadequate and ability to borrow is ltd, gov’t may print money to pay for its spending * Almost all hyperinflations start this way * The revenue from printing money is the inflation tax: printing money causes inflation, which is like a tax on everyone who holds money * The Fischer Effect * Rearrange definition of real interest rate: * Nominal interest rate = Inflation rate + real interest rate * Real interest rate is determined by saving & inve stment in the loanable funds market * MS growth determines inflation rate This equation shows how the nominal interest rate is determined * In long run, money is neutral, so a change in the money growth rate affects the inflation rate but not the real interest rate * So, nominal interest rate adjusts one-for-one with changes in the inflation rate * The inflation tax applies to people’s holdings of money, not their holdings of wreath * Fishcher effect: an increase in inflation causes an equal increase in the nominal interest rate, so the real interest rate is unchanged What are the costs of inflation? How serious are they? * The inflation fallacy: most ppl think inflation erodes real income * Inflation is a general increase in price of the things ppl buy & the things they sell (i. e. labour) * In long run, real incomes are determined by real variables, not inflation rate * Shoeleather costs: the resources wasted when inflation encourages ppl to reduce their money holdings * In cludes the time & transactions costs of more frequent bank withdrawals * Menu costs: the costs of changing prices Printing new menus, mailing new catalogs * Misallocation of resources from relative-price variability: Firms don’t all raise prices @ the same time, so relative prices can vary which distorts the allocation of resources * Confusion & inconvenience: inflation changes the yardstick we use to measure transactions, complicates long-range planning & the comparison of dollar amts over time * Tax distortions: inflation makes nominal income grow faster than real income, taxes are based on nominal income, & some are not adjusted for inflation, so†¦ inflation causes ppl to pay more taxes even when their real incomes don’t increase * Arbitrary redistributions of wealth Higher-than-expected inflation transfers purchasing power from creditors to debtors: debtors get to repay their debt w/ dollars that aren’t worth as much * Lower-than-expected inflation tran sfers purchasing power from debtors to creditors * High inflation is more variable & less predictable than low inflation * So, these arbitrary redistributions are frequent when inflation is high * Costs are high for economies experiencing hyperinflation * For economies w/ low inflation ( 0, â€Å"Capital outflow†, domestic purchases of foreign assets exceed foreign purchases of domestic assets * Capital is flowing out of country * When NCO < 0, â€Å"Capital inflow†, foreign purchases of domestic assets exceed domestic purchases of foreign assets * Capital is flowing into the country * Variables that Influence NCO * Real interest rates paid on foreign assets or domestic assets * Perceived risks of holding foreign assets * Gov’t policies affecting foreign ownership of domestic assets * The equality of NX & NCO * An accounting identity: NCO = NX * Arises b/c every transactions that affects NX also affects NCO by the same amt (And vice versa) * When a foreigner pur chases a good from Canada, * Can’n exports & NX increase The foreigner pay w/ currency or assets, so the Can’n acquires some foreign assets, causing NCO to rise * An accounting identity: NCO=NX * Arises b/c every transaction that affects NX also affects NCO the same amt ( & vice versa) * When a Can’n citizen buys foreign goods, * Can’n imports rise, NX falls * The Can’n buyer pays w/ Can’n dollars or assets, so the other country acquires Can’n assets, causing Can’n NCO to fall * Saving, Investment, & international Flows of Goods & Assets * Y = C + I + G + NX accounting identity * Y – C – G = I + NX rearranging terms * S = I + NX since S = Y – C – G * S = I + NCO since NX = NCO * When S > I, the excess loanable funds flow abroad in the form of positive net capital outflow, NCO >0 * When S e =P*/P implies that the nom exchange rate between 2 countries should equal the ratio of price lvls * If the 2 cou ntries have diff inflation rates, then e will change over time: * If inflation is higher in Mexico than in Canada, Then P* rises faster than P, so e rises – the dollar appreciates against the peso * If inflation is higher in Canada than in Japan, then P rises faster than P*, so e falls- the dollar depreciates against the yen * Limitations of PPP theory, why exchange rates do not always adjust to equalize prices across countries: * Many goods cannot easily be traded: * i. e. haircuts, going to movies * Price differences on such goods cannot be arbitraged away * Foreign, domestic goods not perfect substitutes: * i. e. some Can’n consumers prefer Toyatos over Chevys * Price differences reflect taste differences * Nonetheless, PPP works well in many cases, especially as an explanation of long-run trends * i. e.PPP implies: the greater a country’s inflation rate, the faster its currency should depreciate (relative to a low-inflation country like Canada) * Interest ra te determination in a small open economy w/ perfect Capital mobility * Why do interest rates in Canada & the U. S. tend to move up & down together? * Canada is a small open economy w/ perfect capital mobility * â€Å"small† = small part of the world economy * Canada is an economy w/ perfect capital mobility b/c * Can’ns have full access to world financial markets, * And the rest of the world has full access to the Can’n fin’l market * This means that the real interest rate in Canada should equal the real rate prevailing in the world U. S. r= r^w * Perfect Capital mobility: theory that real interest rate in Canada should equal that in the rest of the world is known as interest rate parity * Limitations: real interest rate in Canada is not always = to the real interest rate in the rest of the world b/c†¦ * Fin’l assets carry w/ them the possibility of default * Fin’l assets offered for sale in different Chapter 13: Macroeconomic theory of the open economy In an open economy, what determines the real interest rate? The real exchange rate? * Market of loanable Funds S=I + NCO * Supply of loanable funds = saving * A dollar of saving can be used to finance * The purchase of domestic capital * The purchase of foreign asset * So, demand for loanable funds=I + NCO * S depends +vely on the real interest rate, r * I depends –vely on r * Real interest rate, is the real return on domestic assets * A fall in r makes domestic assets less attractive relative to foreign assets * Can’ns purchase more foreign assets * Can’ns purchase fewer domestic assets * NCO rises * The supply & demand for loanable funds depend on the real interest rate * A higher real interest rate encourages ppl to save & raises the quantity of loanable funds supplied * The interest rate adjusts to bring the supply & demand for loanable funds into balance * At eq’m interest rate, the amt that ppl want to save exactly balances the des ired quantities of domestic investment & foreign investment * Loanable funds market diagram * R adjusts to balance supply & demand in the LF market * Both I & NCO depend –vely on r, so the D curve is downward-sloping * * In small open economy w/ perfect capital mobility, i. e. Canada, the domestic interest rate = world interst rate * As a result, the quantity of loanable funds made available by the savings of Can’ns does not have to equal the quantity of loanable funds demanded for domestic investment * The difference between these two amts is NCO * * How are the markets for loanable funds & foreign-currency exchange connected? The market for foreign-currency exchange exists b/c ppl want to trade w/ ppl in other countries, but they want to be paid in their own currency * 2 side of foreign-currency exchange market are represented by NCO & NX * NCO represents the imbalance between the purchases & sales of capital assets * NX represents the imbalance b/w exports & imports of goods & services * Another identity from preceding chapter: NCO = NX * In the market for foreign-currency exchange, * NX is the demand for dollars: foreigners need dollars to buy Can’n NX * NCO is the supply of dollars: Can’n residents provide/give dollars when they buy foreign assets * S=I + NCO > S – I =NX * What price balances the supply & demand in the market for foreign-currency exchange? * The real exchange rate (E) = e*P/P* The Can’n exchange rate(E) measures the quantity of foreign g/s that trade for one unit of Can’n g/s * E is the real value of a dollar in the market for foreign-currency exchange * The demand curve for dollars (NX) is downward sloping b/c a higher exchange rate makes domestic goods more expensive * The supply curve (NCO) is vertical b/c the quantity of dollars supplied for NCO is unrelated to the real exchange rate * Increase in E makes Can’n goods more expensive to foreigners, reduces foreign demand for Canâ⠂¬â„¢n goods & dollars, does not affect NCO/supply of dollars * The real E adjusts to balance the S & D for dollars * At Eq’m E, the demand for dollars to buy NX exactly balances the supply of dollars to be exchanged into foreign currency to buy assets abroad * Disentangling S&D When can’n resident buys imported goods does the transaction affect s/d in foreign exchange market? * The demand for dollars decrease * The increase in imports reduce NX which we think of as demand for dollars (NX= net demand for dollars) * When foreigner buys Can’n asset, does the transaction affect supply/ demand in the foreign exchange market * The supply of dollars falls * NCO = Net supply of dollars How do gov’t budget deficits affect exchange rate & trade balance? * The effects of a budget deficit * National saving falls * The real interest rate rises * Domestic investment & net capital outflow both fall * The real exchange rate appreciates * Net export fall (or the trade de ficit increases) * Eq’m in the Open Economy NCO is the variable that links these two markets: S = I + NCO, NCO =NX * In the market for loanable funds, supply comes from national saving & demand comes from domestic investment & NCO * In the market for foreign-currency exchange, suplly comes from NCO & demand comes from BX * * * Eq’m in the open economy * Prices in the loanable funds market & the foreign-currency exchange market adjust simultaneously to balance supply & demand in these two markets * As they, they determine the macroeconomic variables of national saving, domestic investment, NCO, and NX How do other policies or events affect the interest rate, exchange rate, and trade balance? The magnitude & variation in important macroeconomic variables depend on the following: * Increase in world interest rates * Gov’t budget deficits & surpluses * Trade policies * Political & economic stability * Three steps in using the model to analyze these events * Determin e which of the s/d curves e/ event effects * Determine which way the curves shift * Examine how these shifts alter the economy’s equilibrium * * * Increase in world interest rates * Events outside Canada that cause world interest rates to change can have important effects on the Can’n economy * In a small open economy w/ perfect mobility, an increase in the world interest rate†¦ * Crowds out domestic investment, * Cause NCO to increase & * Causes the dollar to depreciate * The effects of an increase in the gov’t budget deficit * * Gov’t budget deficits & surpluses * b/c a gov’t budget deficit represents negative public saving, it reduces national saving, and therefore reduces†¦ * the supply of loanable funds * NCO * The supply of Can’n dollars in the market for foreign-currency exchange * Trade Policy: is a gov’t policy that directly influences the quantity of goods @ services that a country imports/exports * Tariff: a tax o n imported goods * Imported quota: a limit on quantity of a good produces abroad and sold domestically * Initial impact is on imports – which affects NX NX are the sources of demand for dollars in the foreign-currency exchange market * Imports are reduced at any exchange rate, & NX will rise * This increases the demand for dollars in the foreign currency exchange market * * * There is no change in the market for loanable funds, and therefore, no change in NCO * B/c foreigners need dollars to buy Can’n NX, there is an increased demand for dollars in the market for foreign-currency * This leads to an appreciation of the real exchange rate * Effect of an import quota * An appreciation of the dollar in the foreign exchange market discourages exports * This offsets the initial increase in NX due to import quota * Trade policies do not affect the trade balance Political Instability & Capital Flight * Capital flight * Is large & sudden reduction in demand for assets located i n a country * Has its largest impact on the country from which the capital is fleeing, but it also affects other countries * If investors become concerned about the safety of their investments, capital can quickly leave an economy * Interest rates increase & the domestic currency depreciates * When investors around the world observed political problems in Mexico in 1994, they sold some of their Mexican assets and used the proceeds to by assets of the other countries * This increased Mexican NCO An increased demand for loanable funds in the loanable funds market leads the interest rate to increase * This increased the supply of pesos in the foreign-currency exchange market * * Chapter 14: Aggregate Demand & Supply What are economic fluctuations? What are their characteristics? * Over LR, Real GDP grows about 2%/yr on avg * In SR, GDP fluctuates around its trend * Recessions: falling real incomes & rising unemployment * Depressions: severe recessions (very rare) * SR economic fluctuat ions are often called business cycles * 3 facts about economic fluctuations * Are irregular & unpredictable * Most macro’c quantities fluctuate together * As output falls, unemployment rises Use mode of AD & AS to study fluctuations * Short run, changes in nominal variables (Ms or P) can affect real variables (Y/U-rate) How does the model aggregate demand & supply explain economic fluctuations? * Aggregate-demand curve – shows the quantity of goods & services that households, firms, & the gov’t want to buy @ each price level * Aggregate-supply curve- shows the quantity of goods & services that firms choose to produce and sell at each price level * Why does the aggregate-demand curve slope downward? What shifts the AD curve? * AD curve shows quantity of g/s demanded in the economy at any given P * Y=C+I+G+NX * Assume G fixed by gov’t policy Increase in P reduces the quantity of g/s demanded b/c: * The wealth effect (c falls) * The dollars ppl hold buy fewe r g/s so real wealth is lower * Ppl feel poorer * i. e. a stock market boom makes households feel wealthier, C rises, the AD curve shifts right; preferences: consumption, saving tradeoff; tax hikes/cuts * Interest rate effect (I falls) * Buying g/s requires more dollars * To get these dollars, ppl borrow more * Drives up interest rates * i. e. firms buy new computers; expectations, optimism/pessimism; Interest rates, monetary policy; investment tax credit/other tax incentives * The exchange rate effect (NX falls) * Real exchange rate= exP/P* Increase real exchange rate, Can’n exchange rate appreciates * Can’n exports more expensive to ppl abroad, imports cheaper to Can’n residents * i. e. booms/recessions in countries that buy our exports (recession in the U. S. ); appreciation/depreciation resulting from int’l speculation in foreign exchange market * Changes in G * Federal spending i. e defense; provincial & municipal spending i. e roads, schools What is the slope of the aggregate-supply curve in the short run? Long run? What shifts AS curve? * AS curve shows the total quantity of g/s firms produce & sell at any given P * Upward-sloping in short run * Vertical in long run Natural rate of output (Yn) us the amt of output the economy produces when unemployment is at its natural rate * Yn is also called potential output/full-employment output * Yn determined by the economy’s labour (L) capital (K), and natural resources(N), and on the lvl of tech(A) * Changes in L/Natural rate unemployment: immigration, Baby-boomers retire, gov’t policies reduce natural u-rate * Changes in K/H: Investment in factories, more ppl get college degrees, factories destroyed by a hurricane * Changes in natural resources(N): discovery of new mineral deposits, reduction in supply of imported oil, changing weather patterns that affect agricultural production * Changes in tech (A): productivity improvements from technological progress * An increase in P does not affect any of these, it does not affect Yn (Classical dichotomy) * Any even that changes any of the determinants of Yn will shift LRAS * i. e. immigration increases L, causing Yn to rise * Over the LR, tech progress shifts LRAS to the right & growth in the MS shifts AD to the right * Ongoing inflation & growth in output * The SRAs curves is upward sloping: * Over the period of 1-2 yrs, an increase in P causes an increase in quantity of g/s supplied * If AS is vertical, fluctuations in AD do ot cause fluctuations in output/employment * If AS slopes up, then shifts in AD do affect output & employment * Three theories: * Sticky wage theory, Imperfection- nominal wages are sticky in the short run, they adjust sluggishly, due to labour contracts; firms & workers set the nominal wage in advance based on Pe, the price lvl expected to prevail * If P>Pe, revenue is higher, but labour cost is not. Productions is more profitable, so firms increase output & employment * Hence, hi gh P causes higher Y, so the SRAS curve slopes upward * Sticky price theory, Imperfection- many prices are sticky in the short run: due to menu costs, the costs of adjusting prices, i. e. ost of printing new menus, the time required to change price tags * Firms set sticky prices in advance based on Pe * Suppose the BoC increases the MS unexpectedly, in LR P will rise * In SR, firms w/o menu costs can raise their P immediately * Firms w/ menu costs wait to raise prices, meantime , their prices are relatively low, which increase demand for their products, so they increase output & employment * Hence, higher P is associated w/ higher Y, so the SRAS curve slopes upward * Misperceptions- imperfection: firms may confuse changes in P with changes in the relative price of the products they sell, if P rises above Pe- a firm sees its price rise before realizing all prices are rising. The firms may believe its relative price is rising & may increase output & employment, * An increase in P can cause an increase in Y, making the SRAS curve upward-sloping * What 3 theories have in common: Y deviates from Yn, when P deviates from Pe * Y(Output) = Yn + a(P-Pe) * Yn-Natural rate of output (LR) * a>0, measures how much Y responds to unexpected changes in P * P, actually price lvl; Pe, expected price lvl * SRAS & LRAS The imperfections in these theories are temp, over time†¦ * Sticky wages & prices become flexible * Misperceptions are corrected * In LR†¦ * Pe = P, Y=Yn, AS is vertical * Unemployment is at its natural rate * Why the SRAS curve might shift * Everything that shifts LRAS shifts SRAS too * Also, Pe shifts SRAS: * If Pe rises, workers & firms set higher wages * At e/ P production is less profitable, Y falls, SRAS shifts left * * Economic fluctuations * Caused by events that shift the AD/AS curves * 4 steps to analyzing economic fluctuations: * Determine whether the event shifts AD & AS * Determine whether curve shifts left/right Use AD-AS diagram to see how the shift changes Y & P in the short run * Use AD-AS diagram to see how economy moves from new SR eq’m to new LR eq’m * I. e. Stock market crash : C falls, so AD shifts left; SR eq’m at B, P & Y lower, unemp higher; Over time Pe fals, SRAS shifts right, until LR eq’m at C, Y and unemp back at initial lvls * * i. e. oil prices rises: increases costs, shifts SRAS Left, SR eq’m at point B, P higher, Y lower, unemp higher; from A to B, stagflation: a period of falling output & rising prices; if policymakers do nothing: low employment causes wages to fall SRAS shifts right until LR eq’m at A, or policymakers could use fiscal/ monetary policy to increase Ad & accommodate AS shift: Y back to Yn, but P permanently higher