Discuss the alternative policies a government may use to improve a deficit in the Balance of Payments (BOP) There are many ways a government can improve a deficit of the BOP. First we must define the key terms. A deficit is the falling short of revenue as compared with expenditure; the amount of this deficiency; the amount required to make assets balance liabilities. The Balance of payments is a record or overall statement of a country’s economic transactions with the rest of the world, usually over a year. Now it is clear what the question means it is important to understand what causes a deficit in the BOP. There is often a tendency for UK consumers to buy foreign output goods leading to an increase in the amount of imports coming into the county. Often the domestic market cannot cope with the demand so imports are made to satisfy demand. Some UK firms have high non-competitive prices so foreign goods are preferred. Also the quality, designs reliability and after sales service are important. Declining comparative advantages in many areas – the advantages are that countries have in producing certain goods and services change over time as technology alters and other countries exploit their economic resources and develop competing industries. UK manufacturing industry has suffered over the years from the emergence of low cost production in newly industrialised areas such as South Korea and other parts of Europe. A controversial opinion is that the overvalued exchange rates mean that UK exports are very high but imports are relatively cheap. Foreign consumers are inevitably not going to buy as much British goods. What’s more, as the imports are cheaper British people buy foreign goods. The UK used to be a major exporter of oil from the North Sea fields. Finally this market is now past its peak and doesn’t contribute much to the BOP. Protectionist methods are designed to make sure that domestic produce can compete with international produce so that there is a better balance of imports and exports. First of all quotas; this affects the supply of imports. You make barriers on supply prices higher than normal. With quotas the higher prices will mean that foreign firms make higher profits. Quotas can be in terms of volume or value permitted. Sometimes the domestic government sells licenses to foreign firms they in t... ... middle of paper ... ...eed to protect it and can trade on the international stage. The drawback of this is that the industry will never reach full efficiency because it’s free of the disciplines of foreign competition. It also protects against dumping this is when the sale of a good is below the cost of production. In the short-term consumer’s benefit from low prices of foreign goods, however in the long - term domestic businesses will go out of business resulting in the foreign firm having the monopoly over the market. The consequence of this will be that they can then charge what they like. Another important factor is externalities and import controls. Protecting de – merit goods such as alcohol, tobacco and narcotic drugs. By imposing high tariff barriers on these or just banning them it can safeguard society. There are also non-economic reasons a country may not want to specialise because if the market declines or there is a better competitor then there will be mass unemployment. Domestic employment is key government objectives so by protecting industry you are ensuring jobs. Protection may be for political reasons, for instance the UK does not trade with Nigeria and Iraq.
• A more competitive, efficient and profitable business with less competition in the domestic markets.
When people in America see foreign goods for outrageous prices and then they see American goods for normal prices, they are going to buy American products. Unfortunately, this is not the only effect of a protectionist policy. Foreign nations often get upset at the increase in American tariffs and respond by increasing their own tariffs on American goods. This weakens the sales of American goods to foreign nations. In order for the United States to have a favorable balance of trade, then they must have strong exports.
Napster was an American company that created a revolutionary platform that allowed for music sharing online. Originally, it was established as a peer-to-peer file sharing service that emphasized the exchange of MP3 formatted soundtracks. Founded in 1999, by Shawn Fanning and Sean Parker, who rebounded post-Napster to become the first President of Facebook, it operated between June 1999 and July 2001. It was a revolutionary because the network allowed for music to be “set free” – suddenly, an incredible amount of information was made available on the Internet, a relatively new forum that had yet to experience huge waves. Napster was that wave – it democratized the access to information and enabled the common user to listen to millions of songs without having to pay for it. Within a few months of its opening, it had 20 million users – an exponential growth which would attract the attention of large media companies, record labels, and famous bands like Metallica, which would eventually lead to the downfall of Napster.
Deficit spending happens when a government grows its debt, meaning that its spending is greater than its income. Deficit Spending, 2008 Deficit spending is a fiscal policy, that when used appropriately can do some amazing things, like pull the United States up from its bootstraps effectively ending The Great Depression. President Hoover increased government spending by 50% and used the money to fund public works and infrastructure projects from 1928 to 1932. (Deficit Spending, 2008)
In the past, singers made money through CDs and cassettes. These forms of media have been replaced with digital copies of albums and songs. Even this method of accessing music has begun to fade away with the replacement of streaming services such as Spotify, Apple Music, or Soundcloud. Artists’ music has also been used in advertisements. This can negatively affect the artist’s career. Music artists shouldn’t have their songs in advertising.
One of the major areas in which the government intervenes is in the agricultural sector of the economy. The government has three ways it can intervene and help its producers. These ways include price policies, direct payments, and input policies. Price policies have the largest effect on producers. Tariffs, quotas, and taxes are just a few examples of price policies. While these policies bring revenue into the government, in the end they hurt consumers. Each of these policies raise the prices of both imported and native goods. They are designed to help stabilize prices and give the native producers a chance to compete with foreign goods. Under the doctrine of laissez-faire, the government would not interfere with prices and the native producers would be forced to lower their prices, giving the nation's citizens a better deal in the market.
An article written by Daniel L Thornton states the United States has currently surpassed 100 percent of its gross domestic product. A significant amount of this debt is the result of the government’s effort to decrease the effects of the financial crisis. Until recently, large economic deficits have been linked to historic wars: War of 1812, the Civil War, World Wars I and II. The only historic peace-time economic deficit occurred during the Great Depression, when the deficit hit a peak of 6.6% of Gross Domestic Product (Thornton, 2012). In comparison, the deficits for 2009, 2010, and 2011 are all 8.9% or larger, far more than the previously largest single-year peace-time deficit. After each of these periods of large deficits, the budget ran
The competition and consumer act aims to discourage price discrimination in the business environment if the discrimination could substantially reduce competition. An example of price discrimination would be Apple with the distribution of IPhone 5c around the world, the prices vary from $500-$1,500(local currency). The IPhone 5c is less-profitable for Apple but still the price range has a big gap e.g., in Singapore the iPhone costs $948, but in the UK it costs $529 . There are three types of price discrimination (first degree, second degree and third degree) and they all discriminate differently. The price discrimination in business will increase revenue, they will attract more consumers and will enable companies to stay in business. The consequences for price discrimination is that the manufacture/business will get sued by consumers for price discrimination especially when paying higher prices, decline in consumer surplus, there may be administrative costs of separating the markets etc. However, Price discrimination has a lot of impacts on consumers and business owner 's around the world but most importantly it affects people that have been discriminated over the price for the same
And even though the tariff barriers have been reduced significantly, but the other barriers still exist. The developing nations have argued that the protectionist trading policies of developed nations is being an obstacle against the industrialization of many developing nations. Accordingly, developing nations have sought a new international. trading system with improved access to the market of developed nations. Some of the problems that the developing nations faced have been unstable export markets. Deterioration of terms of trade, and limited access to the market of developed.
The large initial capital investment needed for new entrants is another major barrier. The cost of machinery and manufacturing is expensive. It is hugely important and costly to have a global presence in manufacturing as it is extremely expensive to ship machinery to clients around the globe.
Even though schools are not a profit making entity, it is still important to note that at the end of the day they are not owing more than they are earning. The layoff will allow schools to operate in a less stressful environment and does not permit this deficiency to spill over on the students. It is heart-rending when such an action has to be taken but overtime it is the best thing for the institution. In some cases, some schools may rehire a few teachers which it rarely does happen and if it does a significant amount does not get rehire.
Online music streaming can be a big help to musicians who are trying to get their music out there and be heard by a wider audience(Jacob Carter). Stacia Coates states, “Some bands have thoroughly embraced branding and see it more as an opportunity rather than a necessity.” The band The Black Eyed Peas learned that the more they marketed and got involved in branding the more successful they were with fans(Stacia Coates). “For artists serious about their careers, turning down any form of corporate sponsorship or licensing agreements could be a mistake. At times, it’s not only necessary, but a smart way to make it in today’s music business.” Says Stacia
Political arguments for trade intervention are mainly concerned with protecting the interests of certain groups at the expense of other groups. Most of the time domestic firms benefit from this, while customers suffer the consequences.
If you were to ask the average American if they believed downloading music is a good advancement toward the Internet society, in response you would get a 70% of the people agreeing with it. One person said, “Ever since downloading is begun, I have not only learned of new music, but have found bands I never thought I could get.”(Discovering computer 2003) From a typical user you can learn a whole lot when you’re not up to today’s status. A major reason why downloading is great is because it’s free, accessible and everyone can join in on it. All it consi...
Currently in the global environment, there is a strong sense of competition that must be achieved through better performance, almost all firms are competing in international markets due to the reduction in barriers for capital and tariffs. With the new changes in both communication and technology, the consequences faced are that production processes are no longer within national boundaries but spread across (Debrah & Smith, 2002).