MICROECONOMICS: ITS RELATION WITH CURRENT MARKET The burning question in the today is RECESSION. The world leaders are putting their heads down to solve the issue and discussing bailouts, bankruptcy, unemployment and deflation etc. These issues relate to macro economics which is not the subject matter of Micro economics. So why to discuss these things in a topic of micro economics? In fact macro economics originated from micro economics; therefore it is always good to look into the roots rather than beating about the bush. Recession started with the downfall of many big financial houses which could not get their money back from their borrowers. The main reason behind this collapse was the difference between the real cost and inflated market cost of the property against which the loans were provided. When the cork of the champagne opened, inflation blew away like the foam and only a little champagne remained at the bottom to serve to the whole party. The basic principle of micro economics says that wants are unlimited and our resources are limited.
This basic rule was forgotten by the financial institutions. They opened the doors of their treasuries and provided loans to earn maximum but when resources which ought to be limited become unlimited, the suppressed unlimited wants jumped out to be fulfilled. The result was that the economies bloomed; growth rate was higher than the expectations. Every Finance Minister was smiling and thumping his/her back to take the credit. When the reality came, they started hiding their faces. The lenders on the other hand did not even try to smell the gravity of the situation. Here the producers were not looking into the opportunity costs or where should they put their resources put preferably to get the maximum production.
The Term Paper on Economics Notes B-Com
... has an opportunity cost in terms of the number of school forgone. BRANCHES OF ECONOMICS: MICROECONOMICS AND MACROECONOMICS Micro and Macro ... scarce. On the other hand consumers’ wants are virtually unlimited because consumers want houses and bigger houses. Clothes and ... different combination of two goods by employing all the existing resources of an economy most efficiently. Assumptions: • • • The ...
They succeeded only on their side. Their production (borrowing) was full but the return was nominal. Who can bear the un-necessary burden of interest rates for long when one comes to know the reality of the prices? In this context, microfinance can show the way to the world. Noble Prize winner in 2006, Mohammad Yunus categorilly said that his Gramin Bank was doing well despite crash of the markets. He quoted in The Economist (March, 19, 2009) We have not been touched in any way by the financial crisis, he said on a recent visit to Japan. The simple reason is because we are rooted to the real economywe are not paper-based, paper-chasing banking. When we give a loan of $100, behind the $100 there are chickens, there are cows.
It is not something imaginary. He is survived in the typhoon because he had sheltered himself rightly under the earth rather than building castles in the air. And,in order to survive in the current scenario and to be stable one needs to be rational. rational people always go for survival rather than going with just brands like GM,AIG or Chrysler.This fact can not be denied that rational people always look for wise investments.In this time, when there is crunch, the wise descision would be spending optimal amount that would give a good profit in lieu. Also, the squeeze on credit could expose additional frailties in the microfinance model. Many observers suspect that at least some microfinance loans actually finance consumption, not investment, and that borrowers use new loans from one MFI to pay off their debts with another. As long as new credit is readily available, this strategy worksmuch as paying off one credit card with another once did in the rich world. But the credit crunch may expose this as a problem, reckons Justin Oliver, who runs the Centre for Microfinance, a research centre in Chennai, India. It can not be denied that government can improve market outcomes. There are biggies in market that provide employment to infinite number of people in market and hence act as a backbone of the whole country as in case if any biggie faces cruch then government finance it and hence acts as catalyst in giving bailout to the organization itself rather than taking whole control of organization and then giving it to other body to start the organization from scratch.The same happened when government supported American International Group when it faced severe crunch.Government supported AIG by financing it and by giving necessary support to the organization.
The Essay on The Japanese Economy Japan Market Government
The Japanese Economy Jonathan Allen The prewar economy of Japan was a Socialist economy and the country was ruled by an emperor up to WWII and after WWII it started to lean towards a mixed market economy until what it is today although its government is Socialist it is leaning towards a mixed market economy. The Japanese economy is a mixed economy that leans towards market, it is like this because ...
Instead of by giving bailout to the organization and by necessary interference the government should give the same to the consumer. A consumer makes and spoils the market. Many of the worlds leading investment banks have collapsed as a result and the US government has proposed a massive bail-out. There may be some flaws and there may be some strong points in the earlier part of the globalization but the last aspect we touch upon briefly is the influence of international factors. Fluctuations of business activity in one country both affected and are affected by economic event in other countries because of trading & other economic relationships. The links between counties in the form of trade & capital flows can be stabilizing as well as establishing.
Export & imports can act stabilizers for a county experiencing an internally generated cycle. Export, if determined mainly by foreign countries national income are little affected by change in domestic income, while the marginal propensity to import contributes to a smaller expenditure multiplier because like saving, imports represent a leakage .lending & borrowing abroad may also be stabilizing. The disturbances in one country can be transmitted to another. A country suffering from ression cuts its imports. Hence, the squeeze is that Microenomics has direct relationship with both inflation and deflation arising in the current market.And,let market decide the fate of biggies which in turn serve common man and hundreds related with it directly or indirectly..
The Term Paper on How can buyer attitudes about products country of origin affect marketing strategy
... industrialization changes. Change in market development in the culture and lifestyle in that particular country can also affect the perception of the ... product from country which may influence market trends. Early studies on consumer attitudes and preference of domestic and imported produces tend ... of the product, has been shown to be an import factor in the purchase of product like bread as ...
