“Many economic forecasters are suggesting that the US economy is about to enter into recession. Using IS/LM/BP analysis and assuming perfect capital mobility, suggest how the US could use its exchange rate policy to counter this movement but also highlight the potential problems of using such a policy to the US government”.
History Background: The US Economy.
There are increasing signs that the US economy is heading towards a recession as major corporations (from the auto industry, to banking, to technology, to consumer goods) have announced far weaker than expected sales and earnings and a new round of mass layoffs and plant closings. While most pundits still maintain that the US will sustain a decline in growth without a recession, the Financial Times noted that “a growing number of economists now believe that the US is well on the way to recession in 2001” with some arguing that it has already arrived. While that assessment may be “too pessimistic”, it continued, the “threat of a serious downturn for the US is as great as it has been at any time in the past decade.”
The IS, LM, BP Model
When we open the economy to international transactions we have to take into account the effects of trade in goods and services (i.e. items in the current account) as well as trade in assets (i.e. items in the capital account). Opening the economy to international trade in goods and services means that we have to take into account the increased demand for our goods by foreigners (our exports), as well as the decreased demand for our goods that occurs because we purchase foreign goods (i.e. our imports).
The effect of opening the economy to trade in goods and services, is that the IS curve needs to be specified for a given exchange rate. The IS curve still depicts the combinations of I and Y for which the level of total expenditures equals the level of production, but now, in addition to being determined by the interest rate, total expenditures are also determined by the exchange rate. Under a fixed exchange rate regime, the IS curve is fixed (unless there is a change in government spending or tax rates, or the government devalues or revalues the currency). Under a flexible exchange rate regime, the price of foreign exchange fluctuates to equate the demand and supply of foreign exchange.
Meade (1988) stated that, because of the exchange rate rapid decline so much since early 1985 in the US and because the monthly trade statistics has been examined so thoroughly for any sign of a turnaround in the nominal trade balance, the J-curve phenomenon has received much attention. The statistics often implies that the negative effect of depreciation is reflected in the J-curve as the continuation of nominal trade deficit. Between early 1985 and 1988, the exchange value of US dollar in terms of currencies of other countries, registered a sizeable depreciation. The deficits recorded in the trade account were mirrored in the current account deficit. Meade depicted the significance of the exchange rate to the trade account as well as current account through the use of the J-curve highlighting that the phenomenon is used as a long-term goal to curb the deficits, however in the short-run, depreciation will increase the nominal deficits accumulated by a country.
In order to ensure an organization’s financial order, auditors with international standards are a vital part. However, very few auditing companies exist in Afghanistan that can provide auditing services in compliance with international accounting standards. Fortunately, ACC is one of those few auditing firms that can confidently say that its auditing services are in the highe...
...ymen, my heart doth joy that yet in all my life I found no man but he was true to me” (996). Because of his downfall, the punishment no one deserves, and his enlightenment the audience is meant to pity him and feel sympathy for him, for the writer will be effective in receiving the audience’s grief when a character faces trial the audience could not bear to think of such scenario. Brutus is a sympathetic character who is worthy of pity.
Throughout Julius Caesar Brutus acts in accordance with his morals, which makes his eventual fall all the more tragic as Brutus genuinely believed his actions benefitted the future of Rome. Unlike most of the self-interested people around him, Brutus genuinely cares for the continued well-being of the Roman republic. Brutus sees Caesar's rise to power and imminent crowning as a danger to the freedom of the people in Rome since, "crown [Caesar] that, and then I grant we put a sting in him that at his will he may do danger with. Th' abuse of greatness is when it disjoins remorse from power" (2.1.15-19). Brutus knows that many past rulers have turned into tyrants and oppressed their people after gaining substantial authority, and fears that the same tragedy will befall Rome if the Senate crowns Caesar. And although Brutus conspires to kill Caesar rather than finding a peaceful solution to this disagreement, he tells the other conspirators to limit their violence as "this shall make our purpose necessary and not envious, which so appearing to the common eyes, we shall be called purgers, not murderers" (2.1.175-178). Brutus' constant requests to preform the assassination quickly and honorably reveal his concern about the fate of the Romans acts as the motivation behind his actions (unlike the other conspirators who "did that they did in envy of great Caesar") (5.5.71).
Good intentions are just as they sound, they are what all people believe in the deep parts of their minds to be right, but really they are wrong. See the human mind is wired weirdly and has not changed over the course of human history, take Hitler for example. His “good intentions” ended up ruining Germany’s good name and stunning the entire nation. At one point in the play Brutus doesn’t know if Caesar will be the best of leaders for Rome,” Crown him that, and then I grant we put a sting in him that at his will he may do danger with.” (Act 2, Scene 1, lines 16-18). Here Brutus is confused, not knowing what t...
By killing Antony Brutus believes the Roman citizens will view them as murderous creatures, instead of peace bringers. His concern for his nobility leaves him with poor judgment:
Brutus’ negative characteristics are his flawed reasoning and bad judgment. While still planning Caesar’s murder, Cicero’s name is brought up and it is suggested that he be included in the conspiracy. However, Brutus is against this thought, saying that Cicero shouldn’t even be mentioned. “O, name him not. Let us not break with him, / for he will never follow anything/ That other men begin” (916). The problem is further augmented when he allows Antony to speak at Caesar’s funeral. Brutus failed to think twice, and underestimated Antony. Antony asks Brutus to allow him to “in the pulpit, as becomes a friend, / Speak in the order of his funeral” (943). The way he speaks of Caesar is intimate, with his words flowing and carefully placed. In this way he persuades the collective mind of the commoners with ease. Also, Brutus and Cassius’ opposing strategies jeopardize their plan to fight Rome. While Cassius says they should wait to fight, Brutus says the army should march out to meet their adversaries. Cassius explains that they should let the enemy chase after them because that way “So shall he waste his means, weary his soldiers, / doing himself offense, whilst we, lying still, / Are full of rest, defense, and nimbleness” (974). Brutus te...
It has been 5 years now, but the world economy is still hovering over with ill effects of global economic recession. Different economist define recession in a different way but one common definition which can be derived is that recession is long lasting and prime reason for slowdown to economic activity(GDP). In terms of measuring the effects of recession, the broadest indicator of economic activity is real gross domestic product(GDP). Our following section will discuss how the economic activities in US has actually decreased since the beginning of market turmoil.
To balance the trade deficit, U.S. has been borrowing money from other countries including its biggest trade partner: China. It is possible to borrow money from many other countries especially when such country like U.S. have other countries trust. However, it is not the same as how it used to be in the past. As a result, U.S. cre...
In 1929, there was a huge event that happened in America, which called the great recession. As we know, the great recession causes a lot of negative effects not only on the American economy, but also on the world. Nowadays, although most of the economists do hardly predict recessions in the US, the past record still provides America with a little comfort. A new research indicates that the next giant recession would come soon. According to the online article the America’s vulnerable economy by printed edition, several effects have involved in accounting for this coming recession. Those effects are in terms of housing bubbles, debt bubbles and lower customer purchasing power.
Throughout The Tragedy of Julius Caesar, Brutus is an unswervingly noble man. What makes him noble was that, although he loves Julius Caesar as a dear friend, deep down, Marcus Brutus is well aware that Julius Caesar's ambitions would eventually devastate Rome and the people living there. Brutus once exclaimed, “If then that friend demand why Brutus rose / against Caesar, this is my answer: / not that I loved Caesar less, but that I loved / Rome more.” (3.2, 21-24) Brutus joins the conspirators because of his love for Rome. This is nobility in itself – wanting to save the greater good - Rome - instead of his best friend - Julius Caesar. As Brutus’ love of Rome was sounder than any other, (“He is convinced by the other conspirators to join their plot because they believe the future of Rome is at stake.” (Characters: Julius Caesar, n.p.)) Brutus takes action, along with the conspirators, and kills Caesar before his ominous actions were carried out. In itself, th...
...Brutus acted out of his allegiance to Rome, not out of hate, and did what he thought was right. Most everyone knew this. If both his allies and his opponents could think of positive things to say about him in spite of everything that occurred, Brutus truly was an honorable man.
“For many years it has been believed that if countries import more than they export and so have a deficit on the current account of the balance of payments then their currencies will tend to fall in value. Yet over the last two years the dollar has been a strong currency even though USA has had a record current account deficit. How can this fact be explained? What does it tell us about the factors, which determine exchange rates? What policy decisions with regard to exchange rates do you think USA and other governments should take in response to these developments?”
To commence, Brutus’ positive attributes are being an honorable man and a leader. An honorable man, like Brutus, is honest, righteous, and principled. While speaking to Cassius, Brutus makes it known that he “[loves] the name of honor more than [he fears] death” (I.ii.88-89). He is not afraid to announce that he is an honorable man, and does things “[for] the general good” of Rome (I.ii.85). Brutus loves Rome, Caesar, and the people, but he cares more for Rome and its people. As a leader, he and others plan to kill Caesar. Brutus believes that “it must be by [Caesar’s] death”, for he is not killing Caesar for himself “but for the general” good of the people (II.i.10; II.i.12). Others, like Cassius, are killing Brutus for themselves. Brutus initiates a plan to kill Brutus; he is delegating and guiding the others. When the group wants to kill Mark Antony, he is able to persuade them not to. Brutus wants them to “be sacrificers, [not] butchers”, because killing Mark Antony is unnecessary (II.i.167). Brutus is also able to lead his men into battle. Nothing gets in his way, not even his wife’s or Cassius’ death. Brutus’ attributes break him, instead of making him. His character...
The evolution of auditing is a complicated history that has always been changing through historical events. Auditing always changed to meet the needs of the business environment of that day. Auditing has been around since the beginning of human civilization, focusing mainly, at first, on finding efraud. As the United States grew, the business world grew, and auditing began to play more important roles. In the late 1800’s and early 1900’s, people began to invest money into large corporations. The Stock Market crash of 1929 and various scandals made auditors realize that their roles in society were very important. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. The auditors’ job became more difficult as the accounting principles changed, and became easier with the use of internal controls. These controls introduced the need for testing; not an in-depth detailed audit. Auditing jobs would have to change to meet the changing business world. The invention of computers impacted the auditors’ world by making their job at times easier and at times making their job more difficult. Finally, the auditors’ job of certifying and testing companies’ financial statements is the backbone of the business world.