Keynesian Multiplier & Fiscal Policy Impact
The Keynesian Multiplier and Its Impact
The Keynesian Multiplier concept suggests that changes in public expenditure can offset changes in private demand. An increase in public spending boosts domestic production and agents’ disposable income. This increased income, in turn, fuels consumer demand and investment, leading to further production increases, generating more income, and so on.
Haavelmo Theorem and the Ripple Effect
Conclusion 1 (Haavelmo Theorem): An increase in government spending results
Read MoreFinancial Management: Key Concepts and Cycle Analysis
Financial Management: Key Concepts
Tasks of Financial Administration
- Planning: Planning for the future of the company.
- Control: Monitoring and managing financial performance.
- Asset Management: Managing new investments, applications, and resources.
- Liability Management: Fundraising and managing debt.
Key Financial Decisions
- Investment Decisions: Evaluating the profitability of agreements.
- Financing Decisions: Balancing resources and contractor obligations.
- Dividend Decisions: Optimizing yields for the company.
Understanding Foreign Exchange Risk Exposure: Types and Examples
Types of Foreign Exchange Risk Exposure
- Types of foreign exchange risk exposure
Transaction Risk
Transaction Risk is the risk of an exchange rate changing between the transaction date and the subsequent settlement date. Thus, it is the gain or loss arising on conversion.
This type of risk is primarily associated with imports and exports. If a company exports goods on credit, then it has a figure for debtors in its accounts. The amount it will finally receive depends on the foreign exchange movement
Read MoreKey Economic Concepts: Labor, Capital, and Productivity
Key Economic Concepts
Added Value
Added value is the difference between the value of goods produced and the cost of raw materials and intermediate goods used to produce them.
The Demand for Labor
The demand for labor is dependent on the demand for goods and services. For example, if the demand for goods increases, it will require more inputs, and therefore, employers will demand more productive labor. Conversely, when the demand for goods decreases, employers will reduce their demand for productive
Read MoreCost-Volume-Benefit Analysis & Budgeting in Business
Cost-Volume-Benefit (CVB) Analysis
- When modifying the product mix in a multi-product scenario: the magnitudes of the analysis do not vary, but the volumes, prices, and costs do.
- The break-even point provides a perspective to understand the operational situation of the company.
- The benefit/volume ratio (B/V): indicates the benefit needed to cover the amount of sales for the safety margin.
- The composition of sales can define the average product composition in a multi-product CVB analysis. This sales analysis
Key Economic Concepts and Theories
Institutions: Social arrangements created to satisfy the needs of the people in the long run. Adam Smith studied different institutions over time: language, morals, justice, property rights, the division of labor, money, and the market. According to Smith, the institutions most appropriate to a period of commercial interdependence would provide for the governing authority to pursue a laissez-faire (let alone) policy in relation to the economy.
Economics: The social science that studies the production,
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