-"Gross domestic product" (GDP) is a country's total output of goods and services and is considered the broadest measure of an economy's health. But "gross national product" (GNP) measures all the production of a country's citizens anywhere in the world.
Output (Y) = Consumption (C) + Investment (I) + Government Spending (G) + Exports (E) - Imports (M)
-A "recession" is defined as declines in economic growth for two consecutive quarters.
(1). Increasing the money supply will lead to higher inflation in the long run.
(2). There is a trade-off between inflation and unemployment in the short run.
-To do significant damage to the world economy, the oil price would have to rise to $40 or $50 a barrel and even then the impact would not be remotely as big as it was in the oil shocks of 1974 and 1979 (when oil prices, peaked in relation to OECD output at the equivalent of $80 and $150 respectively). (Anatole Kaletsky, Nov 2000)
-Rather than focusing exclusively on Nasdaq and the Internet bubble, therefore, analysts should consider the economy and the stock market as a whole (Anatole Kaletsky, Nov 2000). The Wilshire 5000 index, the broadest measure of the US stock markets, which the Federal Reserve (Fed) believes to be the best indicator of wealth effects and consumer confidence.
-At any given time there will always be some sectors in an economy doing very badly. It is because individual industries fail to reflect conditions in the whole of leading indicators. On the other hand, even with the best will in the world, it seems to be impossible to construct indicators that move reliably ahead of the economy as a whole. (Anatole Kaletsky, Mar 2001)
-It is impossible, in the long run, to increase spending by more than an economy sustainable growth rate without either pushing taxes or borrowing higher. (Lea Paterson, May 2001)
-Cuts in company taxation is one of the things targeted to encourage small enterprises. (Gary Duncan, May 2001)
-The housing sector has long been regarded as a reliable barometer of the health of the consumer side of the economy. (Lea Paterson, Jun 2001)
-Higher levels of productivity is the key to higher standards of living, opportunities for the public and bigger investment in the public services. (Gordon Brown, Jun 2001)
-As a rough rule of thumb, the Federal Reserve (Fed)'s interest-rate cuts take between 6 and 9 months to make their way through the economy. According to The Economist, there is always a lag of 6-12 months before monetary policy has its main impact, but it traditionally works through lower long-term bond yields, higher share prices and a weaker dollar. However, when there is excess capacity and an overhang of debt, interest-rate cuts tend to be less effective in reviving demand.
-The central bank retains what may be its most potent weapon of all: a licence to create money. By controlling the money supply it decides how cheap or expensive it will be to borrow. That affects currency exchange rates as well as stocks, bonds and economic growth. (Tom Raum, Jun 2001)
-Since the Keynesian revolution in economic theory it has been recognised that, in terms of controlling economic cycles, demand is more important than supply, consumption is more important than investment and wages are more important than profits. (Anatole Kaletsky, Jul 2001)
-Inflationary pressures tend to build up in slow but subtle ways, and once they are in place, long and painful adjustment periods may be needed to wring them out. (Michael Moskow, Jul 2001)
-Academic research suggests that most currency board arrangements finish through political choice, rather than a financial market showdown.
-Before John Maynard Keynes, the general view was quite the opposite: economic slumps were supposed to be the invisible hand's way of punishing excesses, and the best cure was supposed to be a good dose of austerity, public or private. Only as a result of the Keynesian revolution did it become obvious to everyone (so obvious that people take it for granted) that the problem during a slump is too little spending, not too much, and that recovery depends on persuading the public to start spending again.
-"Productivity" measures output per worker per hour, which gives you an indicator of any inflationary pressures.
-There is a strong correlation between the sterling/euro rate and the rate of return earned in manufacturing, though with a 2-year time lag. The government can help industry by minimising the tax and regulation burden. (Stephen Radley, The Engineering Employers' Federation, Aug 2001)
-It is clear in retrospect that we should have not taken the original estimates of economic growth too seriously. Anyone who has looked at how economic statistics are constructed knows that they are based as much on educated guesswork as on hard facts. And the guesswork gets more speculative as the economy's center of gravity shifts away from solid, physical products to more ethereal stuff. (Paul Krugman, Sept 2001)
-Many economists point out that employment normally lags behind trends in activity. It is also true that the unemployment rate generally peaks after the trough in the economy. In the current economic cycle the unemployment rate could be even more important than usual since consumer spending has held up so well.
-Alan Greenspan of the Federal Reserve (Fed) said: The greater the degree of confidence in the state of future markets, the greater the level of long-term investment.
-One of the lessons of the Asian financial crisis, declared the IMF's Stanley Fischer, was that "Keynesianism is alive and well"; increased government spending does help the economy.
-The International Monetary Fund (IMF) defines 2.5% growth or less as signalling world recession.
-Competition is good for productivity and not the reverse. (John Vickers, Director-General of the Office of Fair Trading, 28 Sept 2001)
-The ratio of research and development (R&D) to gross domestic production (GDP) is an important international benchmark that measures a nation's scientific development scale and partly reflects the potential of economic growth.
-In the trade channel, weakening demand from the West undermines the exports that are so essential to many emerging and developing countries. And since many of the goods sold by developing countries are either low-value manufactured products or commodities, their prices are also highly susceptible to demand from the big economies. Falling demand, therefore, means a simultaneous slump in export prices as well as volumes, implying a serious deterioration in the so-called terms of trade: the relative levels of export and import prices. At the same time, through the financial channel, the developing world confronts a drop in flows of private capital in the form of both direct and portfolio investment, and the damaging impact of financial contagion as stock and bond market turmoil fuels instability and raises financing costs for governments and companies.
Inadequate access to information causes markets to function imperfectly by diminishing the ability of people to make rational decisions. (Joseph Stiglitz, George Akerlof and Michael Spence)
-In the past 20 years, it has been proved that the most open country experiences the fastest development. (Pierre Pettigrew, Canadian Minister for International Trade, Oct 2001)
-A "deflationary spiral" is a situation where weak demand depresses prices, which in turn dents corporate profits and employment, and ultimately further dampens demand.
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BUSINESS EDUCATION: |
-Think like a big company, act like a small one. (Victor Fung, 1998)
-Sustainable growth is defined as compound annual growth in revenue and net income of more than 5.5%. To meet the target, companies also have to deliver a total shareholder return above the cost of equity. (Bain & Company, 2001)
-Act locally, think globally.
-Stages of Policy Cycle Management: Identification, Design, Management, Monitoring and Evaluation
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BRANCHES OF ECONOMICS: |
*Development Economics
*Econometrics
*Economic History
*Financial Economics
*History of Economic Thought
*Industrial Economics
*International Economics
*Labour Economics
*Law and Economics
*Macroeconomics
*Microeconomics
*Money and Banking
*Public Sector Economics (or Public Finance)
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REFERENCES: |
ATV; China Daily; CNN; The Economist; Harvard Business Review (Sept-Oct/1998); iWon; The New York Times; SiliconValley.com; Star Tribune; The Times; USA Today |