The Environment Today

Given what has just happened in Mumbai over the last two days and what is currently happening in Houston, Texas makes many people think about the environment.

The human being is the only living being on the earth that is responsible for the destruction of the environment and therefore is responsible for changes in climatic patterns as well.

Many have commented that countries like France and England are not having snowfall in winter, that countries close to the equator are experiencing higher temperatures in summer than before.

We don't have to look further than our own city, each summer gets hotter than before and lasts longer than before, the monsoon which used to set in by 10 June seems to appear later each year and disappear faster than before.

Such rapid climate change has not been seen 50 years ago. Initially the blam was put on the rise in pollution and deforestation.

But it is more than that - the rise in human population, the desire for a  luxurious lifestyle and increasing dependence on technology impacts the environment.

It is time people and governments become more conscientious about what their patterns of consumption are doing to the environment and therefore the climate.

Over the next few days we will attempt to list the ways in which human beings negatively affect the environment

Let's Get to Know - World Bank 7

The World Bank employs people from around the globe.
It is a great place to start your career with internships.
Worldstaff work with governments, civil society groups, the private sector and others in developing countries around the world, assisting people in all areas of development, from policy and strategic advice to the identification, preparation, appraisal and supervision of development projects.

Let's Get To Know - World Bank 6

The World Bank Group consists of five organizations:

(5) The International Centre for Settlement of Investment Disputes (ICSID) is an international arbitration institution established in 1965 for legal dispute resolution and conciliation between international investors.
The ICSID is part of and funded by the World Bank Group, headquartered in Washington, D.C., in the United States.
It is an autonomous, multilateral specialized institution to encourage international flow of investment and mitigate non-commercial risks by a treaty drafted by the International Bank for Reconstruction and Development's executive directors and signed by member countries.
As of May 2016^[update], there were 153 contracting member states agree to enforce and uphold arbitral awards in accordance with the ICSID Convention.
The center performs advisory activities and maintains several publications.

Let's Get To Know - World Bank 5

The World Bank Group consists of five organizations:

(4) MIGA is a member of the World Bank Group.

Their mission is to promote foreign direct investment (FDI) into developing countries to help support economic growth, reduce poverty, and improve people's lives.

On April 12, 1988 an international convention established MIGA as the newest member of the World Bank Group.

The agency opened for business as a legally separate and financially independent entity. Membership was open to all IBRD members, and the agency began with capital stock of $1 billion.

MIGA’s original 29 members were: Bahrain, Bangladesh, Barbados, Canada, Chile, Cyprus, Denmark, Ecuador, Egypt, Germany, Grenada, Indonesia, Jamaica, Japan, Jordan, Korea, Kuwait, Lesotho, Malawi, Netherlands, Nigeria, Pakistan, Samoa, Saudi Arabia, Senegal, Sweden, Switzerland, United Kingdom, and United States.

MIGA was created to complement public and private sources of investment insurance against non-commercial risks in developing countries. MIGA’s multilateral character and joint sponsorship by developed and developing countries were seen as significantly enhancing confidence among cross-border investors.

Today, MIGA’s mission is straightforward: To promote foreign direct investment into developing countries to support economic growth, reduce poverty and improve people’s lives.

Let's Get To Know - World Bank 4

The World Bank Group consists of five organizations:

(3) IFC was founded on a bold idea: that the private sector is essential to development.

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries.

They utilize and leverage their products and services—as well as products and services of other institutions in the World Bank Group—to provide development solutions customized to meet clients’ needs.

IFC applies their our financial resources, technical expertise, global experience, and innovative thinking to help their partners overcome financial, operational, and political challenges.

Clients view IFC as a provider and mobilizer of scarce capital, knowledge, and long-term partnerships that can help address critical constraints in areas such as finance, infrastructure, employee skills, and the regulatory environment.

IFC is also a leading mobilizer of third-party resources for its projects. Their willingness to engage in difficult environments and leadership in crowding-in private finance enables them to have a development impact well beyond their direct resources.

Let's Get to Know - World Bank 3

The World Bank Group consists of five organizations:
(2) International Development Association -
Together, IBRD and IDA make up the World Bank.

The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries.

IDA aims to reduce poverty by providing interest-free loans — called credits — and grants to governments of the poorest countries for programmes that boost economic growth, reduce inequalities, and improve people’s living conditions. 

IDA complements the World Bank’s original lending arm—the International Bank for Reconstruction and Development (IBRD). IBRD was established to function as a self-sustaining business and provides loans and advice to middle-income and credit-worthy poor countries. IBRD and IDA share the same staff and headquarters and evaluate projects with the same rigorous standards.

IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of which are in Africa, and is the single largest source of donor funds for basic social services in these countries.
IDA lends money on concessional terms.

This means that IDA credits have a zero or very low interest charge and repayments are stretched over 25 to 40 years, including a 5- to 10-year grace period. IDA also provides grants to countries at risk of debt distress.

In addition to concessional loans and grants, IDA provides significant levels of debt relief through the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).

Let's Get to Know - World Bank 2

The World Bank Group consists of five organizations:

(1) The International Bank for Reconstruction and Development :

The world’s largest development bank, IBRD provides financial products and policy advice to help countries reduce poverty and extend the benefits of sustainable growth to all of their people.

The International Bank for Reconstruction and Development (IBRD) lends to governments of middle-income and creditworthy low-income countries

Created in 1944 to help Europe rebuild after World War II, IBRD joins with IDA, the fund for the poorest countries, to form the World Bank. 

They work closely with all institutions of the World Bank Group and the public and private sectors in developing countries to reduce poverty and build shared prosperity.

The International Bank for Reconstruction and Development (IBRD) is a global development cooperative owned by 189 member countries.

As the largest development bank in the world, it supports the World Bank Group’s mission by providing loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries, as well as by coordinating responses to regional and global challenges. 

Let's Get to Know - World Bank 1

Founded in 1944, the International Bank for Reconstruction and Development—soon called the World Bank—has expanded to a closely associated group of five development institutions. 

Originally, its loans helped rebuild countries devastated by World War II. 

In time, the focus shifted from reconstruction to development, with a heavy emphasis on infrastructure such as dams, electrical grids, irrigation systems, and roads. 

The World Bank Group has set two goals for the world to achieve by 2030:

• End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%
• Promote shared prosperity by fostering the income growth of the bottom 40% for every country

Solution to EQ - Quiz 2 - 2017-18

1. In 1776 the first modern work on economics was published. In it we find among many others the concepts of invisible hand and division of labour.

(a) What is the complete title of this book?

Ans: An Inquiry into the Nature and Causes of the Wealth of Nations

(b) Name the author.

Ans: Adam Smith

          (c) What is the nationality of the author? 

Ans: Scottish

2.       (a) Which famous economist is the author of the book "On the Principles of Political Economy and Taxation"?

Ans: David Ricardo_

(b) Where was he born?

Ans: London

(c) Name the principle / concept of trade which he developed in this book.

Ans: Comparative cost advantage

 (David Ricardo, published "On the Principles of Political Economy and Taxation" in 1817. In it he develops the idea that nations should produce what they are best at compared to other goods. From this specialization, along with freer trade, nations can increase the wealth of its producers and make goods more inexpensive for the consumer)

3. Who wrote the work "Das Kapital"?

Ans: Karl Marx

(The first volume was published in 1867. Marx's collaborator Friedrich Engels edited and released Volumes 2 & 3 after Marx's death.)

4. Who wrote the theory that International trade was zero sum game, therefore any gains in trade by one country would come at the expense of another?

Ans: Jean-Baptiste Colbert. Colbert was economic adviser for Louis XIV. During his tenure, France practiced a specific brand of mercantilism named Colbertism.

5.       (a)  Name the economists who developed the model of the Unholy Trinity?

Ans: Robert Mundell and Marcus Fleming

(b) What does Unholy Trinity refer to?

Ans : you cannot have a fixed exchange rate, capital restrictions and an independent monetary policy in an economy

(c) Why was this theory developed?

Ans: The model was developed to explain how a small open economy would react to the world economy.

6.       (a) According to the Hecksher-Ohlin model, what are the determinants of comparative advantage for different nations?

Ans: (a) factors of production

Eli Heckscher and Bertil Ohlin stated that the relative endowments of individual factors of production (land, labor and capital) determined what a nation was good at making. (e.g. A country like China with large endowments of labor would have a comparative advantage in goods that needed large amounts of labor input.)

(b) What was the nationality of Heckscher and Ohlin?

Ans:    Eli Heckscher: Swedish; Bertil Ohlin: Swedish (was Heckscher’s student)

7.       (a) Name the economists who wrote the theorem that as the price of a good rises the return on the factor of production most heavily invested in the good's production will also rise?

Ans: Wolfgang Stolper and Paul Samuelson

(b) In which year was the theorem published?

Ans: 1941

(c) From which model was the theorem derived?

Ans: Stolper-Samuelson theorem derived their theorem from the Hecksher-Ohlin model. They predicted that holders of the abundant factor of production would be the most pro-free trade as they would receive larger returns on their input.

8.       (a) Name the book which was published in 1936 which theorized that  to achieve "full employment" of labor and capital, government should spend even to the extent of  a budget deficit, so as to increase the "aggregate demand" on goods and services.

Ans:"The General Theory of Employment, Interest, and Money"

(b) Who was the author of this book? 

Ans: John Maynard Keynes

9. Which economist is credited with influencing Ronald Reagan and Margaret Thatcher with his book "The Road to Serfdom"?

Ans: Friedrich Hayek

In his 1944 work, Hayek argued that any sort of "planning" by the government in economics will eventually lead to the rule of the few, those who do the planning, over the many, who eventually become nothing more than serfs to the few.

10.     (a) Who wrote the book "Capitalism and Freedom"?

Ans: Milton Friedman

(b) What is the main argument of this book?

Ans: Milton Friedman states that the government, despite good intentions, often does more harm than good upon entering the economic arena, and therefore should stay out of it whenever possible.

Top scorers: In first place Arnold D'Sa (20 1/2), FYBCom,
                     In second place Elton Fernandes (18), FYBCom and
                     A tie at the third place with 16 1/2; Rishika and Samantha from FYBCom,
                                                                              and Chong and Warren from FYBA.

From TYBA THE INTREPID TRIO, Fatema and Marc with 20, Ibrat with 17.

CONGRATULATIONS TO THE TOP SCORERS

AND

EVERYONE FOR YOUR PARTICIPATION

Did You Know ??? IMF - 7

The IMF was founded, alongside the World Bank, as a result of the Bretton Woods conference in 1944.
A gentleman’s agreement stemming from the founding meetings—at which the only European representation was British—holds that an American will always occupy the top spot of the World Bank, while a European will lead the IMF.

Did You Know ??? IMF - 6

The largest borrowers (amounts outstanding as of March 2017):
   Portugal, Greece, Ukraine, Pakistan

The largest precautionary loans (as of March 2017):
   Mexico, Poland, Colombia, Morocco

Did You Know ??? IMF - 5

Fast Facts
(1) 1944 - the year IMF was established
(2) 189 - member countries
(3) 147 - nationalities represented by staff
(4) 24 - executive directors representing 189 member nations
(5) $1 trillion - total amount IMF is able to lend to member countries
(6) 172 - new loans made since 2008
(7) 40+ - current lending arrangements
(8) 0% - interest rate on loans to low-income countries

Did You Know ??? IMF - 4

SDRs:
The IMF issues an international reserve asset known as Special Drawing Rights, or SDRs, that can supplement the official reserves of member countries.
Total global allocations are currently about SDR 204 billion (some $275 billion).
IMF members can voluntarily exchange SDRs for currencies among themselves.

Did You Know ??? IMF - 3

Surveillance:
In order to maintain stability and prevent crises in the international monetary system, the IMF monitors member country policies as well as national, regional, and global economic and financial developments through a formal system known as surveillance.

The IMF provides advice to member countries and promotes policies designed to
A) foster economic stability,
B) reduce vulnerability to economic and  financial crises, and
C) raise living standards.

Did You Know??? IMF - 2

Primary aims:

• Promote international monetary cooperation;
• Facilitate the expansion and balanced growth of international trade;
• Promote exchange stability;
• Assist in the establishment of a multilateral system of payments; and
• Make resources available (with adequate safeguards) to members experiencing balance-of-payments difficulties.

Did You Know??? IMF - 1

Founding and mission:
The International Monetary Fund was conceived in July 1944 at the United Nations Bretton Woods Conference in New Hampshire, United States.

The 44 countries in attendance  (India was one of them - represented by Economist A. D. Shroff as a non-official since India was not yet independent) sought to build a framework for international economic cooperation in order to avoid repeating the competitive currency devaluations that contributed to the Great Depression of the 1930s.

The IMF's primary mission is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries and their citizens to transact with each other.

Did You Know??? Stock Exchanges - 7

Chicago Climate Exchange is North America's largest and longest running greenhouse gas emission reduction programme.
From 2003 through 2010 CCX operated as a comprehensive cap and trade programme with an offsets component.
In 2011 CCX launched the Chicago Climate Exchange Offsets Registry Programme to register verified emission reductions based on a comprehensive set of established protocols.

Did You Know ??? Stock Exchanges - 6

  

The Tokyo Stock Exchange, which is called Tōshō or TSE/TYO for short, is a stock exchange located in Tokyo, Japan.
It is the second largest stock exchange market in the world by market value, second only to the New York Stock Exchange.
It is the fourth largest stock exchange in the world by aggregate market capitalization of its listed companies, and largest in East Asia and Asia.

Did You Know??? Stock Exchanges - 5

   

The National Stock Exchange of India Limited is the leading stock exchange of India, located in Mumbai.
The NSE was established in 1992 as the first demutualized electronic exchange in the country.
NSE was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system which offered easy trading facility to the investors spread across the length and breadth of the country

Did You Know??? Stock Exchanges - 4

NASDAQ : National Association of Securities Dealers Automated Quotations,
a computerized system for trading in securities.
The Nasdaq Stock Market is an American stock exchange.
It is the second-largest exchange in the world by market capitalization, behind only the New York Stock Exchange.
The exchange platform is owned by Nasdaq, Inc., which also owns the Nasdaq Nordic and Nasdaq Baltic stock market network and several other US stock and options exchanges.

Did You Know??? Stock Exchanges - 3

The London Stock Exchange, or LSE, was formed around 300 years ago and today lists about 2,600 companies from 55 countries.
Many large US companies that are listed on American exchanges also list on the London Stock Exchange - General Electric is one example.

Did You Know??? Stock Exchanges - 2

   

The New York Stock Exchange (NYSE) , also nicknamed the "Big Board", is by far the largest stock exchange in the world in dollar volume and second largest by number of companies listed.

What is FreddieMac?

'Freddie Mac - Federal Home Loan Mortgage Corp - FHLMC'

Freddie Mac is a government-owned corporation that buys mortgages and packages them into mortgage-backed securities.
Its official title is the Federal Home Loan Mortgage Corporation, or FHLMC.

Banks use the funds received from Freddie to make new loans to homebuyers. That boosts the housing market and allows more Americans to become homeowners.

The FHLMC gives banks the ability to create 30-year mortgages.

Freddie Mac (FHLMC) is a stockholder-owned, government-sponsored enterprise (GSE) chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing for middle income Americans.

The FHLMC purchases, guarantees and securitizes mortgages to form mortgage-backed securities. The mortgage-backed securities that it issues tend to be very liquid and carry a credit rating close to that of U.S. Treasuries.

Trump Economics anyone??? Part III

5. Trade
Trump wants more consumers -- in the United States and around the globe -- to buy American.
And it looks like that's starting to happen.
The trade deficit fell slightly in June from three months ago, to $43.6 billion. That's the lowest since just before the election.
America's suddenly vibrant oil industry is a big reason the balance is shifting. Thanks to technologies like fracking, the United States exported more crude in June and imported less.
Exports to Canada and Mexico rose in June, too, a possible sign that Trump's tough talk is working with America's two big North American trading partners.
China is still a sore spot. The U.S. trade deficit with China is up more than 6% this year.

6. Stocks
An undeniable win for the president. Fears of a market collapse under Trump have proved to be misguided.
The Dow keeps hitting records and is up 12% this year.
And the blue chips are lagging.
The Nasdaq has surged nearly 20% thanks to big gains in Amazon, Apple, Google owner Alphabet  and Facebook (FB, Tech30).
For now, Wall Street is willing to ignore the turmoil in the Trump administration.
Investors are hoping for eventual changes to the tax code and deregulation of the financial industry.
Strong earnings don't hurt, either. Profits for the companies in the S&P 500 are up more than 10% from a year ago.

Trump Economics anyone??? Part II

3. Lending
Consumers aren't borrowing just to buy homes. They're taking on debt for cars and using credit cards for lots of other things.
Americans had $3.843 trillion in loans outstanding in May, up from $3.766 trillion at the end of last year, according to the Fed.
And businesses are borrowing more, reversing a trend from earlier this year.
That could be a good sign for Trump and the economy.
Consumers can't prop up the economy alone: Companies need to pull their weight and invest.

4. Consumer spending
Big stores including Macy's, Kohl's and J.C. Penney report earnings this week, and the results could be lousy.
The dominance of Amazon is one reason.
But Americans may also be spending less on clothes, toys and other smaller purchases -- even though they're taking out more loans.
Retail sales fell 0.2% in June. Economists were expecting a slight increase.
And overall consumer spending was up just 0.1% in June.
Spending has increased 2.8% over the past 12 months, a bit below the 3% pace many experts feel is necessary to keep the economy on track.

Trump Economics anyone??? Part I

The good news for Trump is that many parts of the economy are still humming.
Trump is taking credit particularly for strong job growth and record high stock prices.
The housing market is another bright spot.
And the trade deficit has narrowed.

Here's a detailed look at the American economy, 200 days into the Trump presidency.

1. Jobs

It's hard to find fault with the latest jobs numbers.
The unemployment rate is 4.3%, a 16-year low.
The economy has added more than 1 million jobs since Trump took office.
On the other hand, wage growth has yet to really pick up.
Employers still don't feel pressure to offer big salaries to attract the workers they need.
Average hourly earnings have increased only 2.5% over the past 12 months.
The Federal Reserve would rather see 3% to 3.5%.
Still, because inflation is low, those wage gains are helping many Americans.

2. Housing prices
They're red hot.
The average price for an existing home in June was a record $263,800, or 6.5% higher than a year ago.
June was the 64th consecutive month of gains compared with a year earlier.
And borrowing money to buy a house remains relatively affordable, despite recent interest rate hikes by the Federal Reserve.
The average rate for a 30-year mortgage is just 3.93%, according to Freddie Mac, down from 4.02% three months ago.

It is important ... water

In May 2016, the World Bank reported that fresh water scarcity could be the biggest problem facing the economies of the world.
Economies across large portions of the planet could shrink dramatically by 2050 as climate change causes fresh water scarcity issues.

A few regions may suffer particularly badly. One standout is the Middle East, where gross domestic products (GDP) could slip by as much as 14% unless the region comes up with ways to significantly reallocate the supply of fresh water.

Solution to EQ - Quiz I- 2017-18

ANDREAN ECONOMICS ASSOCIATION – FY CHAPTER - 2017-18

Check Your EQ – Quiz I SOLVED

1. What are the four factors of
B. Land, capital, labor, entrepreneurs

2. When a government's expenses for a year are higher than its revenue for that year, the difference is known
C. Budget deficit   

3. If the United States stopped importing cars from Japan, who would most likely benefit?
B. American automakers   

4. Which of the following are most likely to be helped by
C. People who borrowed money at fixed interest rates

5. Which of the following statements about money is
C. It makes buying and selling easier    

6. The stock market is an example of an institution that exists to help people achieve their goals. The existence of the stock
C. Brings together buyers and sellers of stocks

7. If interest rates charged by banks decreased, business would be most likely A. Increase investment spending          

8. A person who starts a business to produce a new product is known in the marketplace as
C. entrepreneur  

9. A large increase in the cost of producing jeans is most likely to result
B. Higher jean prices and fewer jeans bought

10. Since the resources used in the production of goods and services are limited, society
D. Make choices about how to use resources

11. In India, who determines what goods and services will be
D. Producers, consumers, and government

12. If the price of fish doubled and the price of poultry stayed the same, people would most likely
B. More poultry and less fish

13. When a person rents an apartment, who benefits from the transaction?

C. Both the renter and the landlord     

14. For most people, the largest portion of their personal income comes from:

C. Wages and salaries from their jobs  

15. What is PPF?

B. Production Possibilities Frontier

16. Name the three types of taxes.

D. Progressive, proportional, regressive

17. What does the term "Laissez Faire"
A. The philosophy that government should not interfere with business activity

18. What is Scarcity?

C. The condition that results from society not having enough resources to produce all the things people would like to have

19. What do the points along the PPF represent?
A. Maximum combination of output if all resources are fully employed

20. What does the word utility mean?

C. Ability or capacity of a good or service to be useful and give satisfaction to someone

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