Study Of Suitable Investments During A Recession Period Finance Essay - Free Essay Example

Sample details Pages: 7 Words: 2116 Downloads: 7 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? According to Stormy Brain (2008) Keith Robert (2003, p. 31), the key to investing during a recession is to start off with the right mentality and do not panic. They also lay the groundwork for opportunities in the future even recession can be scary. Interest rates fall and it becomes less expensive to borrow money. Cost-cutting processes can teach a company to become more innovative and competitive. The lower demand for products and services brings down the effects of inflation. Warren Buffet, George Soros (1995), Mary Jaksch (2009) also believed that stock market timing is not exact, but chances are that if you invest during a recession, once the market has recovered you will benefit from the increase in price that your investment will bring by way of profit when you do decide to sell. Recession may not seem like the best time to be investing your money but just because we are in a recession doesnt mean the market has come to a complete standstill. There are di fferent ways you can invest which obviously vary depending on your current financial situation. There is an investment possibility for everyone, which can help put a little extra savings back in your pocket and even yield some future wealth down the road. Warren Buffet (1995), Anna Frago (2002), Kelley Wright (2010) stated that blue chip stocks are these companies hold leading positions in their industry and have a long, unbroken record of earnings growth and dividend payments. These stocks are high-grade, investment-quality issues of major companies that have the fundamental strength and size to hold their own during a recession and enough resources to capitalize on an economic recovery. Investors who are conservative and who seek safety and stability will usually invest in this group. In Malaysia, blue chip stocks include Public Bank, Genting, Sime Darby and others. Otherwise, investors typically add defensive stocks to their portfolios during economic recessions, or market downturns. Thats because defensive stocks can be expected to perform relatively well during all phases of a business cycle even during difficult economic conditions as suggested by Warren Buffet (1995) Anna Farago (2002) Berba Velasco (2009), Esme Faerber (2008). A defensive stock is normally associated with a company that belongs to an industry or market sector that is unaffected by business cycles. That is to say, consumer demand for their products or services exists no matter how good or how bad the economy is performing. Defensive stocks are the opposite of cyclical stocks whereby the financial health of cyclical companies move in-sync with the health of the economy. Thats why these stocks are also referred to as non-cyclical stocks. Defensive stocks include companies belonging to the following market sectors are utilities, food beverages, healthcare, non-durable goods. The biggest advantage an investor gains through the purchase of defensive stock is a conservative portfolio that should provide above average returns during a recession. The profitability of these stocks will hold up during these hard times because the demand for the products or services of these companies is relatively inelastic. Warren Buffet (1995), John Waggoner (2006), Esme Faerber (2008) also noted that investments in utility stocks are stocks of electric, water, gas, and telephone companies that are usually with a relatively decent dividend income and high degree of safety. Whether the economy is growing or slowing, people just need electricity, water, gas and phones, these services are an indispensable part of our lives. In Malaysia, there include Terlekom, Tenaga, Petronas and others. In the finding of Jim Roger (2007), Susan C.Walker (2008), Beth Anderson (2008), gold is traditionally seen as a safe investment, especially during a time of financial uncertainty, high inflation, depreciating exchange rates and economic recession. During a recession, gold is seen as a better in vestment than say the stock market. Stocks will fall as companies make less profit. David Prakash Egon von Greyerz (2009) also stated that gold is seen as a safe investment for preserving value of assets and has an intrinsic value. This encourages speculative buying of gold as investors diversify out of other riskier investments. Gold will also become attractive if we have negative real interest rates e.g. inflation higher than nominal interest rates. With negative real interest rates, saving in a bank becomes less attractive and gold become more attractive. Lavanay Bhadwal (2009) Julian D. W. Phillips (2010) also suggested that you can use gold as a short term or a long term investment where they will get sufficient returns. Research and analysis suggests that gold has grown by at least 2% in the last 50 years and the present decade has seen the gold market grow at 4% annually. During a recession, interest rates are typically at their lowest. This means that it will cost the a verage person less money in terms of interest payments to make large purchases. William H. Pivar (2004), Dold de Roos (2005) Sal S Vannutini (2008) suggested that among the largest of purchases is the purchase of a home of piece of investment real estate. As the demand for homes tends to decrease during a recession, sellers are forced to lower their asking prices in order to be more appealing to buyers. This lower asking price is also a monetary advantage to the individual looking to invest in a home or to buy a home and hold on to it long enough to have the market rebound and then sell that home for an easy profit. New home sales have seen a steady decline in value during the recession, but that is by no means the only indicator that those looking for an investment opportunity should use to base their decisions off of. Buying a new home that is currently undervalues simply because of the status of the market can be a brilliant investment move. According to Galen D. Burghardt, T errence M. Belton, Morton Lane, John Papa (2005), corporate bond is a type of bond issued by a corporation. Corporate bonds often pay higher rates than government or municipal bonds, because they tend to be riskier as revealed by the bond holder receives interest payments (yield) and the principal is repaid on a fixed maturity date. US Treasury bond is a negotiable, coupon-bearing debt obligation issued by the U.S. government and backed by its full faith and credit, having a maturity of more than 7 years. Interest is paid semi-annually at fixed coupon rate. U.S. Treasury Bonds are exempt from state and local taxes. These securities have the longest maturity of any bond issued by the U.S. Treasury, from 10 to 30 years. The 30-year bond is also called the long bond. These bonds are not callable, but some older U.S. Treasury Bonds available on the secondary market are callable within five years of the maturity date. In the finding of Esme Faerber (1999) Srichander Ramaswamy (2004), th e prices of the long term US Treasury Bonds or the highest investment grade bonds would expect to increase during a recession because interest rates tend to fall during a recession. Corporate bonds for a bit more risk and pay out higher amounts but have just a little bit more risk than treasury bonds, especially during a recession. Bonds are considered to be less risky than stocks, since the company has to pay off all its debts (including bonds) before it handles its obligations to stockholders. Corporate bonds have a wide range of ratings and yields because the financial health of the issuers can vary widely. A high yield bond or junk bond is a bond that is rated below investment grade at the time of purchase. Edward I. Atman (1992), Matthew Goldstein (2001), Murali Ramaswami (1991) stated that bonds have a higher risk of default or other adverse credit events, but typically pay higher yields than better quality bonds in order to make them attractive to investors. Therefore, in vestors with a greater risk tolerance and much deeper pockets may even want to consider buying into a junk-bond fund. Recent history has shown that junk-bond investors have earned their best returns the year after the junk-bond market bottoms out. In 1991, while the nation was mired in its last recession, the junk-bond market produced an eye-popping 34.6% return on investment, according to Moodys. The impact of declining interest rates is magnified on the junk-bond market because high-yield bonds carry much higher rates than other kinds of bonds. Declining rates make those high yields that much more attractive, which tends to raise the price of the bonds that pay them. Gary L. Gastineau, David Lerman (2001) Archie M. Richard (2007) founded that an exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Most ETFs track an index, such as the FTSE Bursa Malaysia KLCI. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features. Investors can buying shares in several exchange-traded funds, or ETFs stocks that track the performance of a major market index such as the KLCI or the Mesdaq, or are based on actively managed mutual funds. That way, they can participate in any early rally in stocks without being overly exposed to any single companys poor earnings performance. ETFs have grown in popularity with individual investors because theyre cheaper and easier to invest in than traditional stock index funds during recession. Money market deposit account is a savings account which shares some of the characteristics of a money market fund. Like other savings accounts, money market deposit accounts are insured by the Federal government. They are very safe and highly liquid investments, but offer a lower int erest rate than most other investments as suggested by Marcia L. Stgum (1997) Julian Walmsley (2000). Credit default swap is a specific kind of counterparty agreement which allows the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party and the counterparty in the credit default swap agrees to insure this risk in exchange of regular periodic payments essentially an insurance premium. If the third party defaults, the party providing insurance will have to purchase from the insured party the defaulted asset. In turn, the insurer pays the insured the remaining interest on the debt, as well as the principal. During recession, investors should keep some extra money in an interest-bearing money-market account especially if theyre investing money theyll need fairly soon. Matthew Goldstein (2001) also suggested that investors shouldnt expect to get rich off the 4% annual yields offered on most money-mark et accounts but at least theyre guaranteed to make some money. Investors also stash some money in six-month or one-year bank certificates of deposit which on average pay a 2% higher annual yield than a money-market account. For the casual investor who does not have the time or inclination to actively manage his or her own portfolio. Graciela Kaminskyà ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¬Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚   Richard Lyons, Sergio Schmukler (2000) revealed that mutual funds reduce the time and effort needed and stays true even in a recession. The trick is finding mutual funds that do well in tough economic times. Madhu S. Panigrahi (1996), Esme Faerber (1999), Robert Kosowski (2006) Benz Jayma P. (2009) founded that are certain industries that weather recession better than others and the best mutual funds will be sector funds which are based on a specific industry. Industries that do well during economic downturn include utilities and staple consumer goods. Mutual funds in recession-proof s ectors can still be volatile and under-perform if the fund manager buys and sells constantly or the fund charges a high management fee. Review the fee structures for the funds you are considering and choose one with a high historical return and low fee. Other mutual funds that can be considered as recession proof would include money market funds and bond funds. The best way to use mutual funds both before and after a recession is to have a diversified mutual fund portfolio in the first place. Having a constructed portfolio of both stocks and bonds will provide you an opportunity or cushion for participating in stock market growth or markets decline. In conclusion, Warren Buffet (1995), Zvi Bodie Michael J.Clowes (2003), Stormy Brain (2008), Emanuel Balarie (2008) also concluded that recession offers many hidden opportunities and you need to seize them by understanding the basic rules on how to prosper in uncertain times. During this economic crisis, you can make some good long- term investments that will yield you fantastic returns in years to come. However, you should never put all your eggs in the same basket. Diversifying will help to protect your investments and will also give you great returns in good times or bad. Don’t waste time! Our writers will create an original "Study Of Suitable Investments During A Recession Period Finance Essay" essay for you Create order

Comparative Essay On The American And French Revolutions

3.1 Short Paper: Comparative Essay on the American and French Revolutions 1.) Why does the United States come out its revolution with a republic instead of a monarchy? Why do the French wind up with an Emperor Napoleon but the United States does not have a King George of the House of Washington? There are moments in our history where the citizens of the world stand up and for their beliefs, their honor, and themselves. They come together to reform the existing government that is holding them back from achieving their desired lifestyle. When this occurs, most likely, war is inevitable to follow. When war comes to a country, death and destruction is destined. Leaders and rules change, but the pride of its citizens prevails and becomes†¦show more content†¦When that monarchy went against the colonists, and regarded them a part of the empire, this was not entirely how the colonist’s wished to identify themselves. America and its colonists wished to establish themselves as being independent from a monarchy and to have a say in how they were ru led. After the revolution was over, Washington went back to Mount Vernon to retire, or so he thought. When Washington was asked by his fellow founding fathers to become the new King of the United States, his reaction must have been priceless. After fighting the revolution for many long hard years, to get away from a monarchy, and now they wanted to create another one. Washington had his reasons why he did not wish to be king because, â€Å"He was driven by Ameri-can nationalism years before independence was declared, and for eight long years after 1775 he sacrificed as a soldier to bring the American na ¬tion into being. 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Jay Gatsby Free Essays

Jay Gatsby Jay Gatsby, the main character in F. Scott Fitzgerald’s novel, The Great Gatsby, is a materialistic man, trying to live out the American Dream in the 1920’s. But, his way of life does not get him the woman of his dreams, and eventually leads to his death. We will write a custom essay sample on Jay Gatsby or any similar topic only for you Order Now He is an extremely wealthy man, but despite all of his money, is very lonely. Although he never gets the woman he wants, Gatsby was a dreamer. He was motivated to reinvent himself and buy his way through life, with a dream to recreate the past. Jay Gatsby was materialistic from the beginning. From his childhood, to his adult life, he dreamed of being rich. His parents were not wealthy and he grew up in the middle class, but he had always wanted lots of money. Nick Carraway states, â€Å"He was a son of God—a phrase which, if it means anything, it means just that—and he must be about His father’s business, the service of a vast, vulgar, and meretricious beauty† (Fitzgerald 104). No matter how he did it, Gatsby was going to be rich. From age seventeen he was determined and he would stick with his goal. According to critic Chikako D. Kumamoto, Gatsby’s â€Å"vast, vulgar, and meretricious† dream was shared by a social climbing. Nick finally figures out Gatsby’s plans with Daisy Buchannan and says, â€Å"He had waited five years and bought a mansion where he dispensed starlight to casual moths—so that he could come over some afternoon to a stranger’s garden† (Fitzgerald 80). Everything Gatsby did was to win back Daisy’s love. Being a materialist caused him to throw outrageous parties in hopes that one day, Daisy would show up to one. He believed that his money was the only way to win her over. Jay Gatsby was clearly a lonely man. He had all the money in the world to buy anything except for the woman of his dreams, Daisy. Throughout the whole novel, The Great Gatsby, he appears to be bored and alone. â€Å"Your place looks like the World’s fair† Nick Carraway says to Gatsby (Fitzgerald 86). Even to his death, no one cared enough about him to come to his funeral. Carraway tells us, â€Å"but neither a wire nor Mr. Wolfshiem arrived; no one arrived except more police and photographers and newspaper men† (Fitzgerald 110). Striving for only two things in his life never made him very popular. He threw extravagant parties, but no one knew who he was or even liked him for that matter. According to critic Brian Sutton, Gatsby goes to spectacular lengths to try to achieve what Nick Carraway calls â€Å"his incorruptible dream† (Fitzgerald 155). But, unfortunately Gatsby never gets the woman he longs for. Nick tells us, â€Å"After his embarrassment and his unreasoning joy he was consumed with wonder at her presence† (Fitzgerald 99). While Gatsby may have loved the real Daisy, the love that survived over time was of his dream-like conception of her. Jay Gatsby lived a life he dreamed of having but, he dreamed of getting Daisy back and never actually did. Nick tells Gatsby, â€Å"You can’t repeat the past† and Gatsby, being the stubborn man he is, says â€Å"Can’t repeat the past? Why of course you can! † (Fitzgerald 117). His dreams got in the way. Critic Brian Sutton states that Gatsby’s chances of winning Daisy were dead. Finding out the way Gatsby got his money ruined everything he could have had with Daisy. Throughout his whole life, Jay Gatsby would do anything to achieve â€Å"his incorruptible dream† (Fitzgerald 155). Daisy’s marriage seems so awful during most of the novel; it is almost like Gatsby is going to make his dreams come true. His efforts are so unimaginable and Daisy appears to be looking for a way out. Because Jay Gatsby is materialistic, lonely, and a dreamer, he is killed. His own attitude caused his death. Living out the American Dream, trying to become wealthy, and striving to win Daisy’s love did not pay off for Gatsby in the end. Works Cited Fitzgerald, F. Scott. The Great Gatsby. New York: Scribner, 2004. Print. Kumamoto, Chikako. â€Å"Fitzgerald’s The Great Gatsby. † Explicator 60 (Fall 2001): 37-41. Literature Resource Center. Web. 09 Nov. 2012. Sutton, Brian. â€Å"Fitzgerald’s The Great Gatsby. † Explicator 59 (Fall 2000): 37-9. Literature Resource Center. Web. 09 Nov. 2012. How to cite Jay Gatsby, Essay examples

Interview with Simone Eyles-Free-Samples-Myassignmenthelp.com

Question: Discuss about the Significant insights given by the entrepreneurs who achieved wealth and success in the recent years. Answer: Introduction Entrepreneurship can be understood as the capacity of an individual to develop and manage a business by taking risks and rewards in return. For being a successful entrepreneurship, a person needs to have a particular set of characteristics and skills which helps in getting success to the business (Nandan, 2013). This report has been prepared with an aim to discuss and focus on the significant insights given by the entrepreneurs who achieved wealth and success in the recent years. This report is based on the interview conducted with Simone Eyles, who is a founder of a coffee ordering application which helps users to order through technology. The meaningful insights given by the fresh and young entrepreneur will be discussed so that much can be learned from her experience and hard work. Simone Eyles: Founder of 365 cups The interview is held with the founder of online ordering venture 365 cups, Simone Eyles. She is a women entrepreneur and is successful in her business. 365 cups is a platform where the users can place order from all over the world right from the small rural cafes to the large multinationals. The business runs on technology and Simone Eyles started from 365 cups is now serving up to 45000 users in Australia and New Zealand. Simone Eyles, the founder of the venture shares her experience in an interview that she had a long held dream of opening her own caf which is why she came up with the idea of 365 cups (Shying, 2014). From her background, it is clear that she is the proud owner of two businesses which are 365 cups and Working spaces HQ. For starting a business like 365 cups, the founder shares that with the help of technology, she is able to serve huge number of customers across Australia and New Zealand. The brand started with an application and now has 3 stores in New South Wales. So, basically from a small city of Wagga wagga, the founder reached the whole country. 365 cups and inspiration for the business 365 cups is all about linking the customers with the infrastructure, service and technology so that the needs of the tech savvy customers can be met. The customers now, order from their laptops, phones, tablets and the list goes on. The founder shares that the biggest influencer to stat up this business is the people who are in her support. The women inspire her to be the successful and honest entrepreneur. She clears that the natural progression in her success of the business inspired her more to go ahead (Drucker, 2014). The founder explains that she influence others by executing the ideas. Getting ideas or planning about them is easy but executing them is something which needs courage and is the most required skill for a successful entrepreneur. This shows that the young entrepreneurs should start with a good idea, the money and success will follow slowly and gradually. The founder believes in people. She likes talking to its customers and getting connected to them (Carter Jones-Evans, 2009). The wall is provided to the customers where they can post their reviews, photos and messages which is a kind of promotion and advertising. The business also advertises itself on Twitter and Facebook which involves a lot of target customers. From this, I learned that it is important to believe in your people when you want to carry on business with them. An entrepreneur should be honest to its people and should take along its people which will ultimately contribute to the success of the business (Kirzner, 2015). The founder believes that getting connected to the customers and adapting technology and trends made the business successful. It is anticipating even the worst case scenario which helped the entrepreneur to struggle and push forward the business. The founder also discussed the importance of planning in setting up the business and to face and compete with the worst scenarios of the business. Also, tracking the financial progress is equally important so that the money earned can be uti8lisedeeffectively and do not get waste. Being organised is another key tactic which is needed to manage business. The resources need to be organised and back up resources need to be maintained (Wiklund, et al., 2011). Entrepreneurship as per the founder of 365 cups is delivering the value consistently and having clarity of thought. An entrepreneur needs to have the understanding of his/ her own business and how it will contribute in the life of the consumers. Success, on the other hand is taken as the security in terms of finances and profession (Naud, 2010). It is getting the support from the people and being admired by them. To the young entrepreneurs, the founder suggests that there should be a level of responsibility with the people working in the business whether its a family member, friend or employee. Today, an entrepreneur should focus n the presentation of the business which is both offline and online. Promotions of the business can lead it to success. An entrepreneur listens to the heart and should put those ideas into execution by continuing listening to them. Also, the suggestions and the recommendations given by others should be considered for delivering better results to the users (K uratko Audretsch, 2009). The interview conducted made me learn that it is important to plan the idea and to execute it well. But the most important thing is to continue it. The success should be celebrated when more success is gained. I gained insights that a market needs new innovations and ideas so thinking about business is not a bad idea. It is very important to have thinking like an entrepreneur where one takes initiative, ready for the risks, have flexibility and generate secure future (Langevang Gough, 2012). A good market research is important to get a rough idea about the market and the business idea will run or not. To encourage the spirit of entrepreneurship, support is necessary from the family and friends. On a personal level I learned that when proper Research and development is not done in the market, it discourage the business and create chances for failure. It is also very important to manage time and organise business activities in a way which leads to the success of most of the business p lans (Awogbenle Iwuamadi, 2010). The valuable insights gained from an interview include the learning that there is something to learn always from each other. One person does not know everything. An entrepreneur should embrace what makes him/ her unique. Every entrepreneur is unique in own sense and this brings innovation ain business. The lessons learned from the successful entrepreneur increases the chances of getting success. Working with people is another important learning (Littunen Niittykangas, 2010). It is people who bring change by supporting the ideas and business of an entrepreneur. It is important to believe in own ideas and concepts so that the entrepreneur is able to influence others. It is also very important to follow and abide by the trends and technology without which the business will be out-dated and will lack innovation. New and different always attract the attention of people and help in gaining success and praises from most of the people. In all, in the age of globalisation, the business shoul d be ready to accept the changes and manage diversity in the cross cultural business environment of business (Arogundade, 2011). Conclusion To conclude, I would say that this interview has provided deep and valuable insights which would not have been possible otherwise. The findings of this interview or report prepared will be meaningful and will contribute in the process of being a successful entrepreneur. I have my own plans in future to start up a business which is influenced by the views and opinions of the famous entrepreneur like Simone Eyles. I learned that one should not be afraid of taking risks and delegating tasks to the people in the team. I learned how to organise things and time together to make the optimum use of it. This can be used by me in visualising my goals and success. Also, effective communication and listening properly could reduce misconceptions created among the team members which could reduce the quality of performance. Time is valuable which could be used properly to create effective results in the business. I learned that it is very important to create your own value in the world. It can be d one by keeping the things simple and by being a self-motivator in the world of business where there is tough competition. It is noted that being an entrepreneur is not easy rather it is about maintaining a perfect blend of friendly and professional attitude for the followers and with the clients. Everyone is to be treated respectfully to lead everyone without any hesitation in anyone. This interview could be a game changer for me and my business plans in future. References Arogundade, B B (2011). Entrepreneurship education: An imperative for sustainable development in Nigeria.Journal of emerging trends in educational research and policy studies (JETERAPS),2(1), 26-29. Awogbenle, A C Iwuamadi, K C (2010). Youth unemployment: Entrepreneurship development programme as an intervention mechanism.African Journal of Business Management,4(6), 831. by Sara Carter, E Jones-Evans, D. (2009). Enterprise and small business: Principles, practice and policy.Strategic Direction,25(5). Drucker, P (2014).Innovation and entrepreneurship. Routledge. Kirzner, I M (2015).Competition and entrepreneurship. University of Chicago press. Kuratko, D F Audretsch, D B (2009). Strategic entrepreneurship: exploring different perspectives of an emerging concept.Entrepreneurship Theory and Practice,33(1), 1-17. Langevang, T Gough, K V (2012). Diverging pathways: young female employment and entrepreneurship in sub?Saharan Africa.The Geographical Journal,178(3), 242-252. Littunen, H Niittykangas, H (2010). The rapid growth of young firms during various stages of entrepreneurship.Journal of Small Business and Enterprise Development,17(1), 8-31. Nandan, H (2013).Fundamentals of entrepreneurship. PHI Learning Pvt. Ltd. Naud, W. (2010).Entrepreneurship and economic development. Springer. Shying, O 2014, 365 cups become reality, The Daily Advertiser. Wiklund, J, Davidsson, P, Audretsch, D B Karlsson, C (2011). The future of entrepreneurship research.Entrepreneurship Theory and Practice,35(1), 1-9.

How Oil Prices Affect Gross Domestic Product (GDP)

Every country needs some oil to run its errands, but the oil producing nations (OPEC nations) are few in number. From an economic point of view, whenever the suppliers are few, they tend to manipulate the prices of their products. Essentially, OPEC nations agree on the amount of oil to produce and the prices of selling the oil. OPEC nations discuss the target markets, and they dictate the distributing channels for their own good.Advertising We will write a custom research paper sample on How Oil Prices Affect Gross Domestic Product (GDP) specifically for you for only $16.05 $11/page Learn More In a span of one month, oil prices can raise considerably, but since oil has no substitute, the demand for oil remains inelastic. Indeed, oil prices affect nations’ GDPs in one way or another. This paper will give a clear outlay of the effect of oil prices on the various variables in the GDP equation using clear illustrations and graphs. The gross domestic p roduct (GDP) presents the market value of the economic activities within a nation. The GPD sums all the amounts of monies spent in a nation. The four factors that measure the GPD include the consumption levels of the consumers, investment levels of businesses (amount businesses spend on purchasing goods and services), the government spending, and the net exports. In this case, the net exports amount is the difference between the exports and imports. Oil prices have an indirect effect on each factor of the GDP equation, which in turn affects the nation’s GDP levels (Maeda 112). GDP = C +I +G+X Where C is the total consumption of the consumers, I is the investment levels of the businesses,Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More G is the federal, state and government spending, and X is the net exports (exports minus imports). Oil prices and their effects on the total c onsumption of consumers Consumption is directly proportional to the income levels of a household because people can only spend the amount of money that they earn. However, not all the money is spent; earners have to pay income taxes to the government, and some households save some of their income. Whenever the oil prices are high, businesses tend to increase the prices of their products to cater for the rise in the production costs (Pinno and Serletis 202). This factor decreases the consumers’ spending powers, and consumers tend to buy few items. Essentially, some consumers would decide to save their money rather than spend it with the hope that the prices of products would decrease in the near future. The price elasticity of demand will play a critical role in such a case, where, consumers will only purchase necessities and shy away from buying luxuries. Consumer spending forms the largest part of the GPD in most nations. Therefore, whenever the oil prices rise, they reduce the consumer spending indirectly, and consequently, the GPD reduces. In the United States, two third of the GDP comprises of consumer spending. Therefore, a decrease in consumer spending would have a significant effect on the GPD of the US (Kilian and Vigfusson 79). Oil prices and their effects on the total investments As stated before, business investment is the amount of money that businesses spend on purchasing products and services. Moreover, businesses make long-term investments through the purchase of land, fixtures, and equipments. A rise in oil prices is a shock on the supply side of the economy and it has adverse consequences on the economies of countries (Kim 140).Advertising We will write a custom research paper sample on How Oil Prices Affect Gross Domestic Product (GDP) specifically for you for only $16.05 $11/page Learn More Obviously, businesses will experience an increase in the variable costs, especially for manufacturing businesses th at heavily depend on oil. The businesses will resolve on increasing the prices of their products to remain at the same profit margins. From an economic point of view, an increase in prices causes the demand of products to contract, and the businesses are likely to have reduced sales than before. If the oil prices continue to rise, there is a possibility of an economy to experience an inflationary effect. Essentially, the decreased sales means decreased profits; therefore, businesses will have insufficient money to invest. The amount that businesses invest contributes to about 15% of the nation’s GDP. Although the 15% contribution to the nation’s GDP is considerably small, a decrease in the total investments will decrease the nation’s GDP. Oil prices and their effects on the total government spending The government is an overseer that responds to tough economic conditions of the nation. As described, an increase in oil prices is a supply side shock that would in flate the price levels of products and deflate the real output of the economy. The government can respond by relaxing the monetary policy through decreasing the interest rates and taxes. Therefore, businesses will have their production costs somewhat reduced because of the reduced taxes. Another alternative would be increasing government spending by subsidizing the costs prices. However, the options may have adverse consequences on the general economy. Increasing the oil subsidy bill would mean that the government would have to increase its budget and this would affect the other sectors of the economy. Although upstream companies like the Oil And Natural Gas Corporation and Oil India would share a third of the subsidy burdens, the government may have to make short-term borrowings to cater for the unanticipated shock. On the other hand, decreasing interest rates and taxes would decrease the government revenues. Essentially, rise is oil prices would decrease the government spending on goods and services and increase its spending on transfer payments, which is a threat to the GDP. Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Oil prices and their effects on the total net exports If there is an increase in fuel prices, a country that exports manufactured goods may experience an increase in the production costs of the products that it exports. Therefore, the country may lower its productivity and export less of the products than before. Moreover, the country is forced to spend more money on importing the essential petroleum product than before. The two incidences would bring an imbalance on the total net exports and the country may have negative net exports. Conclusion Clearly, a rise in oil prices is an external shock that affects economies in one way or another. Economies that entirely depend on oil-energy for their production processes would suffer greatly if oil prices increased drastically. Sometimes the oil prices drop, but they have negligible effects on the GDP. Therefore, to reduce the effect of the increase in oil prices, companies should find ways of containing other costs and increasing the la bor productivity (Ravazzolo and Rothman 461). It is clear that oil is an essential product with an inelastic demand. Therefore, governments that do not reserve enough oil when the oil prices drop will continue suffering from the supply shocks. It would be advisable for governments to build oil reserves that would greatly help the nation during shortages and during shocks. Works Cited Kilian, Lutz and Robert Vigfusson. â€Å"Do Oil Prices Help Forecast U.S. Real GDP? The Role of Nonlinearities and Asymmetries.† Journal of Business Economic Statistics 31.1 (2013): 78-93. Print. Kim, Dong. â€Å"What Is An Oil Shock? Panel Data Evidence.† Empirical Economics 43.1 (2012): 121-143. Print. Maeda, Akira. â€Å"On the Oil Price-GDP Relationship.† Japanese Economy 35.1 (2008): 99-127. Print. Pinno, Karl and Apostolos Serletis. â€Å"Oil Price Uncertainty and Industrial Production.† Energy Journal 34.3 (2013): 191-216. Print. Ravazzolo, Francesco and Philip Rothma n. â€Å"Oil and U.S. GDP: A Real-Time Out-Of-Sample Examination.† Journal of Money, Credit Banking 45.3 (2013): 449-463. Print. This research paper on How Oil Prices Affect Gross Domestic Product (GDP) was written and submitted by user Cannon Ortega to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

World War I and The Treaty of Brest-Litovsk

World War I and The Treaty of Brest-Litovsk After a nearly a year of turmoil in Russia, the Bolsheviks ascended to power in November 1917 after the October Revolution (Russia still used the Julian calendar). As ending Russias involvement in World War I was a key tenet of the Bolshevik platform, new leader Vladimir Lenin immediately called for a three-month armistice. Though initially wary of dealing with the revolutionaries, the Central Powers (Germany, Austro-Hungarian Empire, Bulgaria, and the Ottoman Empire) finally agreed to a ceasefire in early December and made plans to meet with Lenins representatives later in the month. Initial Talks Joined by representatives from the Ottoman Empire, the Germans and Austrians arrived at Brest-Litovsk (present-day Brest, Belarus) and opened talks on December 22. Though the German delegation was led by Foreign Secretary Richard von KÃ ¼hlmann, it fell upon General Max Hoffmann- who was Chief of Staff of the German armies on the Eastern Front- to serve as their chief negotiator. The Austro-Hungarian Empire was represented by Foreign Minister Ottokar Czernin, while the Ottomans were overseen by Talat Pasha. The Bolshevik delegation was headed by Peoples Commissar for Foreign Affairs Leon Trotsky who was aided by Adolph Joffre. Initial Proposals Though in a weak position, the Bolsheviks stated that they desired peace without annexations or indemnities, meaning an end to the fighting without loss of land or reparations. This was rebuffed by the Germans whose troops occupied large swaths of Russian territory. In offering their proposal, the Germans demanded independence for Poland and Lithuania. As the Bolsheviks were unwilling to cede territory, the talks stalled. Believing that the Germans were eager to conclude a peace treaty to free troops for use on the Western Front before the Americans could arrive in large numbers, Trotsky dragged his feet, believing that moderate peace could be achieved. He also hoped that the Bolshevik revolution would spread to Germany negating the need to conclude a treaty. Trotskys delaying tactics only worked to anger the Germans and Austrians. Unwilling to sign harsh peace terms and not believing that he could delay further, he withdrew the Bolshevik delegation from the talks on February 10, 1918, declaring a unilateral end to hostilities. The German Response Reacting to Trotskys breaking off of the talks, the Germans and Austrians notified the Bolsheviks that they would resume hostilities after February 17 if the situation was not resolved. These threats were ignored by Lenins government. On February 18, German, Austrian, Ottoman, and Bulgarian troops began advancing and met little organized resistance. That evening, the Bolshevik government decided to accept the German terms. Contacting the Germans, they received no response for three days. During that time, troops from the Central Powers occupied the Baltic nations, Belarus, and most of Ukraine (Map). Responding on February 21, the Germans introduced harsher terms which briefly made Lenin debate continuing the fight. Recognizing that further resistance would be futile and with the German fleet moving towards Petrograd, the Bolsheviks voted to accept the terms two days later. Re-opening talks, the Bolsheviks signed the Treaty of Brest-Litovsk on March 3. It was ratified twelve days later. Though Lenins government had achieved its goal of exiting the conflict, it was forced to do so in brutally humiliating fashion and at great cost. Terms of the Treaty of Brest-Litovsk By the terms of the treaty, Russia ceded more than 290,000 square miles of land and around a quarter of its population. In addition, the lost territory contained approximately a quarter of the nations industry and 90 percent of its coal mines. This territory effectively contained the countries of Finland, Latvia, Lithuania, Estonia, and Belarus from which the Germans intended to form client states under the rule of various aristocrats. Also, all Turkish lands lost in the Russo-Turkish War of 1877-1878 were to be returned to the Ottoman Empire. Long-Term Effects of the Treaty The Treaty of Brest-Litovsk only remained in effect until that November. Though Germany had made massive territorial gains, it took a large amount of manpower to maintain the occupation. This detracted from the number of men available for duty on the Western Front. On November 5, Germany renounced the treaty due to a constant stream of revolutionary propaganda emanating from Russia. With the German acceptance of the armistice on November 11, the Bolsheviks quickly annulled the treaty. Though the independence of Poland and Finland was largely accepted, they remained angered by the loss of the Baltic states. While the fate of territory such as Poland was addressed at the Paris Peace Conference in 1919, other lands such as Ukraine and Belarus fell under Bolshevik control during the Russian Civil War. Over the next twenty years, the Soviet Union worked to regain the land lost by the treaty. This saw them fight Finland in the Winter War as well as conclude the Molotov-Ribbentrop Pact with Nazi Germany. By this agreement, they annexed the Baltic states and claimed the eastern part of Poland following the German invasion at the start of World War II. Selected Sources Avalon Project: Treaty of Brest-LitovskGuide to Russia: Treaty of Brest-LitovskFirst World War: Treaty of Brest-Litovsk

Machiavelli The Prince Essay Example | Topics and Well Written Essays - 750 words - 1

Machiavelli The Prince - Essay Example oted to Lorenzo de Medici), so that he might get back his administration posts and start the realization of his political plans.  The writing is worth-considering, therefore the given paper will discuss the relevance  of the Machiavelli’s advice in the modern world.   Ã‚  Ã‚  Ã‚  Ã‚   The Prince is considered to be unique. It represents a large recommendation the author provides the Prince with. The Prince is given a valuable advice on how to receive new lands in his possession and how to implement the necessary control in these new lands (Machiavelli, 1997). It is clear that this advice can’t be considered as relevant in the modern world, because now we do not solve our problems with the help of wars. Now we have legislation as the main orientation in political decision making. However, for the time, when The Prince was created, it represented a valuable advice: Because how one ought to live is so far removed from how one lives that he who lets go of what is done for that which one ought to do sooner learns ruin than his own preservation: because a man who might want to make a show of goodness in all things necessarily comes to ruin among so many who are not good. Because of this it is necessary for a prince, wanting to maintain himself, to learn how to be able to be not good and to use this and not use it according to necessity. (Machiavelli, 1997) It is clear, that this advice should by no means be used by modern politicians because it can destroy democratic principles, which have been created during many centuries, however the recommendation is practical for the Machiavelli’s time (Machiavelli, 1997). Notwithstanding that the advice of Machiavelli concerning acquiring new lands can’t be used today, his writing The Prince contains many other valuable and relevant advices, which should be remembered by the contemporary rulers: Some people want to rule, others want to be ruled. It is important to remember that some people are ready to work and other are