Thomas Davison finance report Essay Example | Topics and Well Written Essays - 2000 words

Thomas Davison finance report - Essay Example Salaries Wages and Payroll Costs A more detailed study of the available accounting data reveals that Salaries and Wages showed a 9.6% negative variance over the budgeted amount and Payroll Costs also showed a negative variance of 9.6%. While Salaries and Wages are basically the amount of money paid to employees and are self explanatory, it must be mentioned that Payroll Costs essentially consist of employers’ contribution to social security and other statutory expenditures incurred by an employer in connection with employing a personnel. These variances, though noteworthy, can, however, be explained. One must remember there is a genuine dearth of good manpower in the area of operation of our company and the management must be prepared to pay high remuneration packages if they are intent upon selecting the best that is available in the market. So, an increase in Salaries and Wages and Salaries is bound to happen if the company wishes to remain competitive. The increase in Payro ll Costs by almost an equal percentage is obvious as these are statutory liabilities that are bound to increase if Salaries and Wages increase. The main variance, however, lies in Recruitment Costs which is a massive 82% over what had been budgeted. This surely needs some serious analysis. Employee Training and Development Costs The foundation of any organization is talented and hardworking people who are the principal assets of any firm, especially one that is involved in providing consultancy services. It is an established fact that the growth of an organization requires continual infusion of quality staff and an organization can achieve its objectives only when it has the right person in right positions (Carlson, Connerley and Mecham 2002). But this is a continuous process that just does not begin and end with getting hold of suitable people and somehow put them on company’s payroll. Even in a situation where only a single job vacancy might attract a few hundreds of applic ations, there is a challenge of selecting the most appropriate one. Freshly appointed persons might need orientation training to familiarize them of the way things are done in the organization. And, in case they have been selected only on the basis of academic qualifications and aptitude for learning, they might need training in specific skills as well. The employee’s experiences during orientation and placement form their ‘first impression’ of the organization. So, any organization, especially a service provider like us that is so very much dependent on the quality of human resources available at our disposal we should be extra cautious about ensuring that the new recruits get a very good â€Å"first impression’ about our organization. This would motivate employees and who does not know that a motivated employee is the costliest resource that an organization can ever possess. However, training and development is never restricted to new employees. Even ex isting employees, whilst on job, need training for up-gradation of knowledge and skills and for preparing for higher responsibilities. One should never lose sight of the acutely competitive market where we operate. It is absolutely necessary for our company to be well acquainted with cutting edge technology in order to remain at the top of the heap and this can only happen if there is a continuous system of training and deve

Understanding strategic corporate social responsibility Essay

Understanding strategic corporate social responsibility - Essay Example One of these is called strategic corporate social responsibility, an interesting perspective that is often equated with enlightened self-interest. Considerable amount of literature have been produced on the subject of the stakeholder concept. In addition to the identification of who these stakeholders are, attempts have been made to categorise them. Clarkson (1995) has divided them into primary stakeholders and secondary stakeholders. The former are those who are essential to the survival of the firm: the owners/shareholders, customers, employees, communities, the government, and (contingently) suppliers and creditors. Secondary stakeholders are those that are not essential to the firms survival but are affected by its operations; these include interest groups such as environmentalists, the media, intellectual critics, trade associations, and even competitors. An expansive view would include future generations and natural entities such as the earths atmosphere, oceans, terrain, other living creatures as part of the stakeholders. In this stakeholder model, the welfare of each is an end in itself, not just a means to enrich or b enefit investors. This is in contrast with the traditional concept which puts the interests of the investors/ shareholders as paramount. There are several definitions of corporate social responsibility, but in general, according to Buchholz (1992), the concept means that a private corporation has responsibilities to society that go beyond the production and sale of goods and services at a profit – that the corporation has a broader constituency than the stockholders alone. Post et al (1996) states that a corporation should be held accountable for any of its actions that affect people, their communities, and their environment. Further, the corporation relates to society through more than just the marketplace and serves a wider range of human values than the traditional economic values that are dominant in the marketplace.

A Swot Analysis On Pizza Hut Marketing Essay

A Swot Analysis On Pizza Hut Marketing Essay SWOT Analysis is one of several strategic planning tools that are utilized by businesses plan, gives overall direction to an organization within its chosen environment, guides allocation of resources and efforts. SWOT analysis also provides information that is helpful in matching the firms resources and capabilities with the competitive environment that it operates. Other than this, the process of SWOT involves four areas of consideration: strengths, weaknesses, opportunities, and threats. It should be noted that when identifying and classifying relevant factors, the focus is not just on internal matters, but also external components that could impact the success of the project. Strengths are defined as the positive attributes of the organization, which are within the organizations control. Such as, specialist marketing and advertising skills, patents, introduction of new and innovative product or service, cost benefit through proprietary knowledge, strong reputation. Weaknesses is f actors that are within the organization control and can easily be improved. It is necessary to take care of your weaknesses because these factors can detract you in achieving your goals and objectives. Opportunities is portunities are the external factors that are providing benefit your business directly or indirectly. Such as, market growth, careful research about market, market size. Threats these are also the external factors, which are not in organizations control, but they can seriously damage your organization mission. Threats include competition, economic crises, earthquakes, competition, price war, new regulations. Pizza Hut is the company owned by Yum! Brands in 1997 by Wichita and Kansas. The headquarter is located at Texas USA. The company is engaged in restaurant industry producing wide range of pizzas, pastas etcà ¢Ã¢â€š ¬Ã‚ ¦ By 1972, with 314 stores nationwide, Pizza Hut went public on the New York Stock Exchange under the stock ticker symbol PIZ.In 1977, Pizza Hut was acquired by PepsiCo, who later also bought KFC and Taco Bell. In 1997, the three restaurant chains were spun off into Tricon, and in 2002 joined with Long John Silvers and AW Restaurants to become YUM! Brands. Pizza Huthas opened Pizza Hut Express which specializes in small 6pizzas. The oldest continuously operating Pizza Hut in the world is in Manhattan, Kansas, in a shopping and tavern district known as Aggie Ville. 2.0 SWOT for Pizza Hut 2.1 Strengths The strengths of Pizza Hut is the main strengths of company is their focus on their product and services. Added to that is the ambience or the facility which is not under the category of fast food but a restaurant. The idea of creating this kind venue is to provide the bond between families and friends. Another factor is the on-going efforts of the restaurant to provide the healthier pizza. It is because they found out that there is a percentage of their target that is health conscious. The idea is to strip or cut off the unnecessary calories and fats when the cheeses is added to the dough. The product reinvention did not stop there as the company included to their menus that news tastes and combination of different pizza which is according to the tastes and preferences of the consumers. To gain additional trust from the market, the company pursues their research and develops pizza dippers, as another answer to their never-ending customer demands. 2.1.1 Weakness Pizza Hut is identified as the largest users of cheese that affects the pizza hut branches that lacks the supply of cheese. The problem with alternatives is eventually identified buy the consumers and there is a narrow choices for substitutes. Other than that, the company reported that they incurred high cost in terms of their production, the root of this problem is on the intense competition and their pizza reinvention just to satisfy the taste buds of the customers. As a result, the overhead cost pushed the restaurant branches to have additional charge, not knowing that because of their action, there is more probability to lost most of their consumers. 2.1.2 Opportunities Pizza Hut opened lots of doors through their pizza reinventions or product innovation. This is evident in the increase on the revenue and increasing brand loyalty with their customers. Their service and products are outstanding and the offered new taste combinations and expansion of the varieties of menus also touched their pastas, beverages, and desserts. As said earlier, the opportunity is also part of the marketing strategy of the company to provide the proper utilization of the technology through their online-ordering system. The use of landline is still viable but the evolving world of technology where almost 70% of their customers is sitting in front of the computer gives the company bright ideas to establish their relation with them, with their customers own convenience. 2.1.3 Threats Many companies are bothered by the high competition and Pizza Hut is not different from those companies. Competition really gets the firms to push their limitations and boost up the needed investment just to answer the risky competition. Pizza Hut is also concerned with their customer satisfaction and most of the extensive research and development is allotted to the needs of the customers. The roles of prices, promotions, advertisement, and delivery systems make the competition too risky and lead the customer in some series of confusion. When there are many options, the customers find it hard to choose and sometimes lead to dissatisfaction. 2.2 Market share In the near of the place have a Pizza Hut. Their business is good from many customer. There are many ways to other a pizza and their add-ons in Pizza Hut. The customer can choose whether the order can be made by call or by online. In call ordering, the customer will dial a specific number that been assigned for pizza hut call centre. Here, a customer will be asked about their name and address. The detail will be stored in a database therefore when the same customer call again, their address are already been identified. The customer then can state their order and the staff that work in call centre will double check the order for confirmation. The staff will detail the time of delivery and the price for the customer to stand by. After a certain time, the order will be delivered to the customer. The customer will pay the price and enjoyed the pizza. For online ordering, IT infrastructures are totally involved. The customer needs to log in to Pizza Hut (Malaysia) website using internet. From there, they need to log in. If the customer is a first time using the services, therefore, the customer needs to register. In the registration, the customer will need to fill up a form that asked about the details of the customer such as name, identity card(IC), address, phone number and others important details and will be stored in a database. The interesting fact that using online ordering in Pizza Hut is that the customer can save their favorite choice of menus for future order. Then, the customer will state the order and check the order before checkout. After checkout, the customer will need to pay using Maybank2U.com.my. A transaction authorization code (TAC) is needed for security reason. After payment had been settled, there will be an email sent it to the customer to confirming the order had been received. The customer will received the order by delivery within hour or on the specific date that been selected by the customer itself. Why are there good of business The fast food self-service concept like KFC, McDonalds, AW and Marrybrown seemed to draw more lunch time crowd compared with Pizza Huts dine-in concept of catering mainly to dinner crowd. This causes a major restaurant space slag and wasted capacity due to timing difference. But then, Pizza Hut Malaysia is part of KFC and strategically, this is a niche over second generation type of restaurant practiced by Dominos Pizza What Pizza Hut may attempt to do is to introduce a fast food lunch package consisting of a slice of pizza, garlic bread, coleslaw/salad and a Pepsi and pricing the lunch pack equal or cheaper to the fast food counterpart to draw lunchtime crowd. Most office workers have only one hour and speed of service is key to its success. This will definitely increase sales turnover and eventually proliferate the pizza eating culture in Malaysia. Pizza Hut restaurants are centrally located and combine modern dà ©cor with the atmosphere of a classic, traditional restaurant. The comfort of our restaurants, their carefully designed lighting and modern music, create an attractive environment. All our restaurants have air conditioning. Our sanitation network and our strict adherence to the rules of the health inspectorate ensure that all our restaurants are clean and hygienic. Conclusion Pizza Hut has many targets which it has achieve in a given period of time. The time-period is mostly a tear. Therefore, in order to fulfill the targets different strategies are adopted by Pizza Hut. It can be concluded that these strategies have been successful and there is flexibility in the strategies, as they can be changed with the changes in the market conditions as well as the targets. Pizza Hut has built the strong reputation of its brand throw giving the quality products and earned the respect from its customers. Its innovation and quality with commitment took higher and higher during past few years. But still the company is planning to go and capture more market share. The employees and the management know what they have to attained through the targets which have been put to them and the plans they have assumed help them recognize the way they will accomplish the objectives. Similarly, Pizza Hut has diverse targets set to the mand they have adopted different strategies to su ccessfully achieve the targets set. 1.0 Introduction The factors which influence a decision are also termed as its environment. The environment can be Internal, can be controlled by the organization; Micro, specific to the industry and is different for different industries; and lastly Macro, generic in nature and impacts the whole business environment. The Macro Environment includes all the factors which are external to the firm and which cannot be controlled by the organization. And also they are not specific to any industry but influence all the firms but the influence may be at different level. As a Marketing manager, on musty have knowledge of different factors which influences the marketing decision of a firm, And also since they are not controllable, one must adjust the decisions as per the changes in the environment. The Important factors comprising the Macro Environment of Marketing are Demographic, Economic, Socio-Cultural, Natural, Technological and Political-Legal. Influence of each factor shall be discussed in detail in the following parameters. 2.0 Macro-environment factors would impact on the operation of Pizza Hut of Malaysia 2.1 Demographic factors The demographic factors in the take-out pizza industry have provided new positive opportunities for companies in the industry. Now day, Pizza hut have many ways to order. Many people like to use the number specially to order the pizza from Pizza Hut. Pizza Huts general market segment is younger generation. But they go wide in this thing. They segment high incomes and business class families which can spend money on the best pizza sin the market. Pizza Huts global slogan is also describing its market segmentation that is Now its time to eat more. But in Pakistan, the slogan is Share the good times. Main age group is12-30 years. Pizza Hut Pakistan offers Halal foods to all its customers. Pizza Huts general market segment is younger generation. But they go wide in this thing. They segment high incomes and business class families which can spend money on the best pizzas in the market. Pizza Huts global slogan is also describing its market segmentation that is Now its time to eat more. Bu t in Pakistan, the slogan is Share the good times. Main age group is 12-30 years. Pizza Hut Pakistan offers Halal foods to all its customers. 2.2 Economic environment Economic environment is the factors that affect consumer buying power and spending patterns. For Pizza Hut, this part is concerned to the overall perspective for the economy. The macro economy of a nation has a huge impact on a business such as Pizza Hut. Factors in the economy include the gross domestic products, the unemployment and inflation rates, the foreign trade deficit and surplus. If the overall economy of a country is not favourable, lesser people will franchise Pizza Hut because they will most likely loss a great amount of money instead obtaining profits. 2.3 Natural environment Pizza Hut for being the first mainstream fast food chain to jump on the Natural wagon. I saw an advertisement today for Pizza Huts new Natural pizza. Whats so natural about this pizza. 1. Multi-Grain Crust (note not organic, not whole wheat, but a multitude of grains) 2. Sauce made-with organic tomatoes 3. Choice of new natural toppings (which from the images they showed consists of sliced tomatoes and begs the question are the rest of the toppings not-natural?) 4. All-Natural mozzarella cheese Its just yet another example of the bastardization of the term natural. Junk food purveyors of the world are all racing to slap the term natural on their packaging to win the hearts, taste buds and market share of pseudo-conscious consumers. 2.4 Technological environment The technological environment is about the new technology creates new markets and opportunities, replaces existing products and service. Also to research and development activity drives this sector, country spending on RD. Other than that, technological environment include government programs to encourage more and government agencies to regulate new product safety. The fast changes in technology nowadays have far-reaching effects in the business. The factors that have a huge impact are the research and development, internet and e-commerce, and new technologies. The research and development has effects on the business of Pizza Hut because through RD new products are developed for the business, the internet and e-commerce also contributes to the technological factors because through them customers can give feedback regarding the products of Pizza Hut which can also aid in the research and development, and the service of the company. Political environment Political environment is about laws, government agencies, and pressure groups, influence and limit organizations and individuals within a society, increasing legislation. And also increased emphasis on ethics and social responsibility. Business legislation is used to protect consumers, businesses, and the interests of society. It is the most difficult from the four factors because the attitudes and beliefs of people are difficult to quantify. Aside from the attitudes and beliefs, demographic factors such as population and life expectancy are also important aspects in the analysis of the social factors. The influence of the values and beliefs affects the business of Pizza Hut. For example in India beef or pork is not served in the Pizza. The changing trends in the taste of the consumers also play an important role in the external analysis of the environment. If the current trend in the society is being health conscious, thus consumers will demand that the foods be healthy. Its most di fficult from the four factors because the attitudes and beliefs of people are difficult to quantity. Aside from the attitudes and beliefs, demographic factors such as population and life expectancy are also important aspects in the analysis of the social factors. The influence of the values and beliefs affects the business of Pizza Hut. The changing trends in the taste of the consumers also play an important role in the external analysis of the environment, if the current trend in food is thai. Therefore Pizza Hut can add an additional food such as vietnarnese or thai soups. If the current treand in the society is being health conscious, thus consumers will demand that the food be healty. Cultural environment Cultural environment is an institutions and other forces that influence. Societys basic values, perceptions, preferences, and behaviours. Core beliefs passed on through family, reinforced by institutions and secondary beliefs are more open to change. Sometimes that peoples views of, themselves, others organizations, society, nature and the universe. Each country has its own specific culture which is called National Culture and can be defined as : The values, belief, attitude and norms shared by individuals from a specific country that shape their behavior and beliefs about what is important? Every global organization has its own culture which is called Organizational Culture. Pizza Hut manages in global environment by giving more importance and emphasis to the national culture than its own culture. 3.0 Conclusion Pizza Hut is company who business model had stood the test of time. Today they are an industry giant with name recognition and restaurants spanning the globe. The company has been able to retain market share despite efforts by competitors due to introduction of new products and services and the customer focus. Pizza Hut strives to achieve customer satisfaction and loyalty. They created a system in order to receive customer feedback in order to improve service. They also created a bonus structure which makes individual store managers focus on the customer experience. The bonus structure needs to be restructure to avoid the current situation of managers of poor performing stores receiving bonuses while managers of very profitable stores, receiving less if not nothing at all. The focus on the customer experience is a contributing attribute which separates the company from the rest of the competition. If your customer is satisfied and feels you are delivering good value, then loyalty will grow your business. A loyal, satisfied customer, is you best form of advertising. And also they are not specific to any industry but influence all the firms but the influence may be at different level.

Robert Frost Essay -- Robert Frost Poet Poems Essays

Robert Frost   Ã‚  Ã‚  Ã‚  Ã‚  Robert Frost, an Americian poet of the late 19th century, used nature in many of his writings. This paper will discuss the thought process of Frost during his writings, the many tools which he used, and provide two examples of his works.   Ã‚  Ã‚  Ã‚  Ã‚  Robert Frost was born in San Franciso on March 26, 1874, but later moved to Lawrence, Massachuschusetts (after his father died) where he did most of his writing. He was a simple man who taught, worked in a mill, was a reporter, was a New England farmer, and wrote. Throughout his life he had always been interested in literature. He attended Dartmouth College, but remained less than one semester. In 1894 he sold his first work â€Å"My Butterfly: An Elegy† to a New York journal. A year later he married Elinor White. From 1897 to 1899 he attended Harvard College as a special student but left before he acquired his degree. For the next ten years he wrote poems, operated a farm in Derry, New Hampshire, and taught at Derry’s Pinkerton Academy.   Ã‚  Ã‚  Ã‚  Ã‚  In 1912 he sold his farm and moved to England where he could work on his writings full time. He was an instant success! â€Å"A Boy’s Will† was accepted by a London Publisher and a year later so was â€Å"North of Boston†. He also began to get recognized in America.   Ã‚  Ã‚  Ã‚  Ã‚  The Frosts sailed for America in 1915 and landed in New York two days after the Americian release of †North of Boston†. The book was a good success and he used the profits to buy a farm in Fanconia, New Hampshire. During this time Frost began to write his most successful poems.   Ã‚  Ã‚  Ã‚  Ã‚  Frost was once asked his thought process during writing; he responded:   Ã‚  Ã‚  Ã‚  Ã‚  Ã¢â‚¬Å"I sometimes speak from the last thing that happened to me. I got asked today if I think up poems. Do I think them up? How do I get the right one? Well, it is the hardest thing in the world to tell. But I don’t think up poems. I pick up a lot of things I thought of to make a poem; that is a lot of scattered thoughts through the days that are handy for the poem-that’s about all. That’s where the thinking comes in.†   Ã‚  Ã‚  Ã‚  Ã‚  That is truly an amazing feat; he would just walk around looking at things and a poem would come into his head. He would write these entire inspirational poems in his head and didn’t even think that it was unusual. The best poet of the 20th century did not write rough drafts!   Ã‚  Ã‚  Ã‚  Ã‚  In 1915 he moved to New England and... ... the inauguration of President John F. Kennedy. He once stated that his major goal in life was to write â€Å"a few poems that would be hard to get rid of.† Well, congratulations Mr. Frost. Works Cited Field, Evgene. Poems of Childhood. New York: Charles Scribner's Sons Inc. 1925 Gerber, Philip L. Robert Frost. New York: Twayne Publishers, 1967. Greiner, Donald J. Robert Frost: The Poet and His Critics. Chicago: American Library   Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Association, 1974. Lathem, Edward Connery, ed. The Poetry of Robert Frost. New York: NA, 1969. Lathem, Edward, ed. Interviews with Robert Frost. New York: Holt, Rinehart, and Winston.   Ã‚  Ã‚  Ã‚  Ã‚  1966. NA. Robert Lee Frost. CD-Rom. Microsoft, 1999. Reeve, F.D. Robert Frost in Russia. Boston: Little, Brown Publishers, 1964. Sergeant, Elizabeth Shepley. Robert Frost: The Trail by Existence. New York: Holt, Rinehart,   Ã‚  Ã‚  Ã‚  Ã‚  and Winston, 1960. Thompson, Lawrance. Robert Frost: The Early years, 1874-1915. New York: Holt, Rinehart and   Ã‚  Ã‚  Ã‚  Ã‚  Winston, 1966. Unger, Leonard, ed. American Writers. New York: Charles Scribner's Sons, Inc. 1961. Van Egmond, Peter. The Critical Reception of Robert Frost. Boston: G.K. Hall and Co., 1974.

Super Size Me

The movie starred and was directed by independent filmmaker Morgan Spurlock[1].   Spurlock undertakes to explain the rampant obesity in America as a function largely of overdependence on convenience food and dining in quick-service restaurant chains. Spurlock strove to make his point by undertaking to consume only McDonald’s products for a whole month.   His stated goal was to investigate the impact of fast food, of which McDonald’s is the archetype, on the epidemic of obesity (and associated diseases such as hypertension and diabetes) plaguing America. Prior to starting the experiment, Spurlock was physically fit but in the end, he had gained considerable weight and was showing early signs of health problems.   The film presented its thesis in stark fashion: eat excessive fast food, get sick. â€Å"Super Size Me† employs the documentary format that â€Å"The Blair Witch Project† and â€Å"March of the Penguins† made famous. Basically, a camera followed Spurlock around wherever he went, chronicling his activities and feelings every so often. The film followed a chronological format that showed Spurlock’s descent from fit and bright-eyed to miserable and overweight. Also included were interviews with nutritionists, doctors and other people who helped shed light on the question; â€Å"Why is America obese?† The device of eating nothing but fast food may seem unrealistic.   Or perhaps not; how many of us would rationally avoid convenience foods if there was no one to cook breakfast or dinner?   Do parents know what children eat all day long when they are away at college? Spoofing the fast food habit this way does serve to compress the timeframe, create shock value and teach by entertaining.   One doubts that the audience would be as attentive if a physician had delivered a lecture on video about the ill effects of eating fast food for 20 or 30 years. Spurlock essentially consumed over 5,000 calories per day of nothing but obviously fattening McDonald’s staples: Big Mac’s, French fries and soda. In his defense, Spurlock[2] said he was mimicking the diet of a â€Å"super-heavy user†, Marketing lingo for an avid patron. At the same time, Spurlock satirized the slothful habits of many Americans who do not care to exercise. Even if they did not consume McDonald’s foods in the amounts he did, it is unlikely that they eat a balanced, nutrition-dense diet anyway. Despite the criticism level against it, â€Å"Super Size Me† remains shocking and relevant. Millions of Americans are undoubtedly ‘addicted’ to a diet of fast food that contains unhealthy levels of sugar and cholesterol. As shown by Spurlock’s own transformation, such relaxed eating compounds the problem by lowering the desire to exercise and be active. Naturally, the most shocking scene in the movie is when a complete physical examination reveals the extent of his physical deterioration. The domino effect does not stop there. Obesity and lack of activity causes numerous health problems such as heart disease and diabetes. Already, a largely overweight generation of â€Å"baby boomers† has begun to overwhelm the health care system. For a nation built on the industry and creativity of its people this truly bodes ill. [1] Super Size me Directed by Morgan Spurlock Spurlock, in audio commentary track [2] Spurlock, in the movie, and again on the DVD commentary track

Economic History Essay

According to Keynes, recessions and financial crises can be avoided if central banks maintain general equilibrium in the money markets (via monetary policy). It can reduce money supply by selling bonds. It can increase money supply by buying bonds. This increase-decrease in money supply is a general mechanism utilized by central banks to ensure the robustness of the financial market. In short, the aim of the policy is to make the prices of financial assets stable (prevents panic). Keynes, however, argued that monetary policy does not raise the national income. Monetary policy only creates an ‘illusion’ of economic prosperity. Keynes favored the use of fiscal policy in increasing the level of national income because of two major reasons. First, fiscal policies are easier to implement than monetary policies. A government can increase or decrease its expenditure level depending on the status of the economy. If an economy is in recession, then the government can increase its level of expenditure. If actual GDP exceeds potential GDP, then a slight decrease in government spending is necessary. Note that the mechanism by which fiscal policies are implemented are much less sophisticated than that of implementing monetary policies. Second, the effects of fiscal policy are more ‘pronounced’ than that of monetary policy. An increase in government spending automatically increases the level of national income. B) Explain what Friedman thought were the pros and cons of the active use of fiscal policy and of monetary policy. (3 points) Friedman argued that fiscal policy is not an effective tool for preventing recessions and financial crises. For instance, deflationary fiscal policy would be ineffective if the marginal propensity to consume tend to increase with respect to the interest rate. Inflation would therefore be a very difficult problem to solve. This instance led Friedman to conclude that fiscal policy is actually an economic barrier to foster economic activity. Friedman, however, viewed monetary policy as a mechanism for stabilizing an economy. For example, too much money in an economy would cause prices of goods and services to increase. Too little money in an economy causes a contraction in the GDP. Monetary policies are designed to effectively combat both inflation and deflation, and increase efficiency in the money markets. According to Friedman, the cause of the Great Depression was not overproduction, but rather the Crash of 1929. The inefficiency of the money market created instability in stock prices, which ultimately led to the Crash of 1929. For Friedman, efficiency of money markets is an important determinant of economic stability. C) Where do these two economists agree? Where do they disagree? (2 points) Both economists recognized the importance of interest rate adjustments in boosting an economy. For Keynes, interest rate is an important factor in inreasing investment and consumption level in an economy. For Friedman, interest rate serves as a stabilizing agent in adjusting the prices of financial and non-financial instruments. The two economists however differed on the extent to which interest rates can be used to boost an economy. Keynes preferred a more rigorious reduction in interest rates while Friedman a more conservative approach in interest rate adjustments. There is another significant disagreement between the two theorists. Friedman rejected the concept of permanent income hypothesis which states that as income increases, the fraction allocated to savings also increases. Keynes supported this hypothesis. D) What is your own view on this debate? Explain. (2 points) The use of either fiscal or monetary policy is dependent on economic circumstances. For example, a demand-induced recession can be effectively resolved by fiscal policy while a supply-induced recession can be resolved by monetary policy. No single macroeconomic theory can fully explain or resolve all macroeconomic problems. A) Neoclassical economic theories are based on the assumption that people are rational. Did Thorstein Veblen have a favorable view of neoclassical economics? Discuss his views on this issue. (3 points) Thorstein Veblen rejected many of the assumptions of neoclassical economics. He argued that the term ‘rational’ is generally vague even from the standpoint of modern economics. Rationality is an idea that excludes behavior which is not based on a measured calculation of costs and benefits. Veblen argued that rationality itself is a relative idea; an idea which is based on economic, political, socio-cultural, and economic factors. Veblen established the idea of ‘conspicuous consumption. ‘ According to him, demand is often fueled not only by economic factors alone but also by sociological factors. Those individuals belonging to the upper strata of society often engaged in conspicuous consumption because it enhances status. By conspicuous consumption, Veblen meant a general precedent of artificially increasing demand out of conscious desire to enhance status. Conspicuous consumption is a state where actual consumption greatly exceeds actual needs. B) Consider the articles on behavioral economics at http://myweb. liu. edu/~uroy/eco54/histlist/behav-econ/index. html. Read and summarize the main thrust of some of these articles. (3 points) In the article, â€Å"How Obama is Using the Science of Change,† Grunwald argued that Obama hired some of the best professors in behavioral science to help him in his campaign. This so-called ‘behavioral team’ assisted Obama in evaluating the behavioral instance of the voters, in order to find the correct political stance. According to the author: â€Å"Obama won the election because he looked like change, sounded like change and never stopped campaigning for change. But he didn’t call for just change in Washington – or even just change in America. From his declarations that ‘change comes from the bottom up’ to his admonitions about ‘an era of profound irresponsibility,’ Obama called for change in Americans† (Grunwald, 2009). According to the author, Obama relied his presidency on the ability of every American to change behavior. Although his top priorities – health care, energy, international peace – depended on this change. For Obama, economic prosperity could only be achieved through constant moralistic evaluation of individual conduct. Saving energy, protecting the environment, and promoting a responsible system of governance are highly related to individual decisions. C) Based on these articles, what is your opinion of the value of the contributions of behavioral economics to economic analysis? Explain. In the past, economic phenomena were solely explained by economic factors. For example, fluctuations in GDP were generally explained by varying levels in consumption, investment, trade accounts, and government expenditure. Efficiency in money and capital markets were solely explained by confidence levels, risk based assets and liabilities, and in general, federal funds rate. Today, there is a growing interest in associating economic phenomena with non-economic factors. This interest is not without basis. Some economists, notably Hayek and Kuznets, were able to show that some non-economic factors influenced, sometimes, determined economic phenomena. For example, the failure of capitalist reforms in Latin America during the 1970s was attributed solely to political instability. Becker, for instance, proved that individual reaction to income and tax changes affect the overall labor supply in an economy. In his time allocation model, Becker posited the hypothesis that individual behavior directly influence aggregate income. D) Do you think behavioral economics represents a return of Veblen’s ideas? (2 points) Behavioral economics may be thought as a return to Veblen’s ideas. Behavioral economics has the following assumptions which reflected Veblen’s ideas: 1) Individual decision-making patterns influence economic decision making in the public sphere; 2) Individual behavior is influenced by the behavior of other individuals; 3) Economic phenomena are sometimes directly influenced by actions of institutions; 4) And, consumption and investment are not solely determined by interest rate and confidence levels respectively. It should, however, be noted that most of Veblen’s ideas tackled non-economic issues, so it is impossible to assume that behavioral economics is a determined return to Veblen’s ideas. A) To what extent has economics benefited from the application of mathematical methods in the analysis of economic issues? (2 points) The application of mathematical methods benefited economics in the analysis of economic issues in three respects. First, mathematical methods allowed the construction of elaborate and sophisticated models in explaining economic phenomena. Second, these models greatly enhanced the means by which prediction is utilized. Many of the models used were helpful in assessing economic trends, and in general, in determining future consumption, investment, and public budget levels. Third, these methods provided economists formal, logical reference points. It is very difficult for an economist to analyze an economic phenomenon without the proper guidance from theory (it is very probable for an economist unguided by theory to draw misleading and sometimes, false conclusions). B) What is game theory? Discuss some of its contributions to economic analysis. What is your opinion of the value of the contributions of game theory to economic analysis? (3 points) Generally, game theory is a mathematical system for analyzing and predicting how humans behave in strategic situations (Camerer, 2001). Standard equilibrium analyses assume all players: 1) all forms of belief based on analysis of what other may do (this is called strategic thinking); 2) choose a best response given those beliefs (optimization); 3) adjust best responses and beliefs until they are mutually consistent (equilibrium). Game theory, unlike the ‘nomothetic’ macroeconomic theories, assumes that not all players behave rationally in complex situations. Assumtions (1) and (2) are violated, or more accurately relaxed. Players’ fate are intertwined. The presence of players who do not think strategically or optimize can change what rational player will do. As a result, the standard way of predicting individual behavior often becomes invalid. At best, game theory offers a new approach in analyzing individual behavior. It relaxes the concept of rationality. This is desirable because individual often act irrationally in many circumstances. Game theory may provide supplementary insight in economic analysis of actor units. Game theory may provide vivid differentiation between collective and individual action. Note that sometimes, there is discrepancy between collective and individual action (which is not shown in standard microeconomic analysis). C) What is econometrics? Discuss some of its contributions to economic analysis. What is your opinion of the value of the contributions of econometrics to economic analysis? (3 points) Econometrics is the use of statistical tools in formal economic analysis (Garcia, 2004). Paul Samuelson was one of the first economists who developed the field of econometrics. He used complex regression systems to predict specific economic phenomena like business cycles and GDP fluctuations, and to determine optimal tax and desired levels of public goods. In general, the contributions of econometrics to economic analysis are as follows: 1) accurate prediction systems, 2) precise determination of specific contribution of economic factors (in regression anaysis), and 3) determination of direction of economic trends. At best, econometrics is used to confirm or dispove economic theories. It is a means by which theories can be empirically verified. D) Comment on Paul Krugman’s article â€Å"Two Cheers for Formalism† which is available at his web page http://web. mit. edu/krugman/www/. It is much safer to assume that formalist economics is still useful in analyzing economic events. The reason is evident. Much of economic theorizing are essentially based on logical analysis of economic precedents which altogether comprised what is called ‘models’ – the physical representation of reality. Many of Krugman’s assumptions are essentially based on whimsical distortion of economic facts. This distortion is evident. Krugman treated theory as if it was based on pure logical thinking. For the most, theories are partially constructed from actual observations. In any case, there is no sense in arguing that a new economics is needed to explain current trends in the world economy, for economic theories, at the present, can explain those trends. References Camerer, Colin. 2001. Behavioral Game Theory: Thinking, Learning, and Teaching. California: California Institute of Technology. Garcia. Yolanda. 2004. Lectures in Econometrics. Universit of the Philippines. Grunwald, Michael. 2009. How Obama is Using the Science of Change. Retrieved on April 25, 2009 from http://myweb. liu. edu/~uroy/eco54/histlist/behav-econ/index. html The New Palgrave Dictionary of Economics.