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Wednesday, January 12, 2011
Hixam Community: Accounting for Payroll: A Comprehensive Guide
Hixam Community: Accounting for Payroll: A Comprehensive Guide: "Accounting for Payroll: A Comprehensive Guide Product Description A one-stop resource for setting up or improving an existing payroll..."
Hixam Community: Tips for Writing Economics Essays.
Hixam Community: Tips for Writing Economics Essays.: "1. Understand the Question. Make sure you understand the essential point behind the question. If appropriate, you could try and rephrase th..."
Tips for Writing Economics Essays.
1. Understand the Question.
Make sure you understand the essential point behind the question. If appropriate, you could try and rephrase the question into a simpler version.
For example:
Q. Examine the macro economic implications of a significant fall in UK House prices, combined with a simultaneous loosening of Monetary Policy.
In plain English.
What is effect of falling house prices on Economy?
What is effect of falling interest rates (loose monetary policy) on economy
In effect there are two distinct parts to this question. It is a valid response, to deal with each separately, before considering both together.
2. Write in Simple sentences.
For clarity of thought, I usually find it is easier for students, if they stick to writing shorter sentences. The main thing is to avoid combining too many ideas into one sentence. If you write in short sentences, it may sound a little stilted; but it is worth remembering that there are no extra marks for a Shakespearian grasp of English. (at least in Economics Exams)
Look at this response to a question:
Q. What is the impact of higher interest rates?
Higher interest rates increase the cost of borrowing. As a result, those with mortgages will have lower disposable income. Also, consumers have less incentive to borrow and spend on credit cards. Therefore consumption will be lower. This fall in consumption will cause a fall in Aggregate Demand, and therefore lead to lower economic growth. A fall in AD will also reduce inflation. (draw diagram)
I could have combined 1 or 2 sentences together, but here I wanted to show that short sentences can aid clarity of thought. Nothing is wasted in the above example.
Answer the Question.
Quite frequently, when marking economic essays, you see a candidate who has a reasonable knowledge of economics, but unfortunately does not answer the question. Therefore, as a result, they can get zero for a question. It may seem harsh, but if you don't answer the question, the examiner can't give any marks.
At the end of each paragraph you can ask yourself; how does this paragraph answer the question? If necessary, you can write a one-sentence summary, which directly answers the question. Don't wait to the end of the essay to realise you have answered a different question.
Example.
Discuss the impact of EURO membership on UK fiscal and monetary policy?
Most students will have revised for a question on: The Benefits and Costs of the EURO. Therefore, as soon as they see the EURO in the title, they put down all their notes on the benefits and costs of the EURO. However, this question is quite specific; it only wishes to know the impact on fiscal and monetary policy.
Evaluation.
The "joke" goes, put 10 economists in a room and you will get 11 different answers. Why? you may ask. The nature of economics is that quite often there is no "right" answer. It is important that we always consider other points of view, and discuss various different, potential outcomes. This is what we mean by evaluation.
For example:
The effect of raising interest rates will reduce consumer spending.
However, if confidence is high, higher interest rates may not actually discourage consumer spending.
If the economy is close to full capacity a rise in interest rates may reduce inflation but not reduce growth.
However, if there is already a slowdown in the economy, rising interest rates may cause a recession.
In UK A - Levels evaluation counts for 40% of the final Mark.
Make sure you understand the essential point behind the question. If appropriate, you could try and rephrase the question into a simpler version.
For example:
Q. Examine the macro economic implications of a significant fall in UK House prices, combined with a simultaneous loosening of Monetary Policy.
In plain English.
What is effect of falling house prices on Economy?
What is effect of falling interest rates (loose monetary policy) on economy
In effect there are two distinct parts to this question. It is a valid response, to deal with each separately, before considering both together.
2. Write in Simple sentences.
For clarity of thought, I usually find it is easier for students, if they stick to writing shorter sentences. The main thing is to avoid combining too many ideas into one sentence. If you write in short sentences, it may sound a little stilted; but it is worth remembering that there are no extra marks for a Shakespearian grasp of English. (at least in Economics Exams)
Look at this response to a question:
Q. What is the impact of higher interest rates?
Higher interest rates increase the cost of borrowing. As a result, those with mortgages will have lower disposable income. Also, consumers have less incentive to borrow and spend on credit cards. Therefore consumption will be lower. This fall in consumption will cause a fall in Aggregate Demand, and therefore lead to lower economic growth. A fall in AD will also reduce inflation. (draw diagram)
I could have combined 1 or 2 sentences together, but here I wanted to show that short sentences can aid clarity of thought. Nothing is wasted in the above example.
Answer the Question.
Quite frequently, when marking economic essays, you see a candidate who has a reasonable knowledge of economics, but unfortunately does not answer the question. Therefore, as a result, they can get zero for a question. It may seem harsh, but if you don't answer the question, the examiner can't give any marks.
At the end of each paragraph you can ask yourself; how does this paragraph answer the question? If necessary, you can write a one-sentence summary, which directly answers the question. Don't wait to the end of the essay to realise you have answered a different question.
Example.
Discuss the impact of EURO membership on UK fiscal and monetary policy?
Most students will have revised for a question on: The Benefits and Costs of the EURO. Therefore, as soon as they see the EURO in the title, they put down all their notes on the benefits and costs of the EURO. However, this question is quite specific; it only wishes to know the impact on fiscal and monetary policy.
Evaluation.
The "joke" goes, put 10 economists in a room and you will get 11 different answers. Why? you may ask. The nature of economics is that quite often there is no "right" answer. It is important that we always consider other points of view, and discuss various different, potential outcomes. This is what we mean by evaluation.
For example:
The effect of raising interest rates will reduce consumer spending.
However, if confidence is high, higher interest rates may not actually discourage consumer spending.
If the economy is close to full capacity a rise in interest rates may reduce inflation but not reduce growth.
However, if there is already a slowdown in the economy, rising interest rates may cause a recession.
In UK A - Levels evaluation counts for 40% of the final Mark.
Forecast for Interest Rates 2011
The UK economy faces a few paradoxes.
Low Growth – High Inflation. Firstly, after a deep recession the economic recovery is weak. In theory, high unemployment and low growth should lead to low inflation. However, due to rising energy and food prices, we have inflation above target. This presents a conundrum for the Bank of England – do they increase interest rates to reduce inflation or do they keep interest rates low to boost spending and help reduce unemployment?
High Unemployment – Yet tight Fiscal Policy and tight Monetary Policy. Usually at this stage in the economic cycle, you wouldn’t want a tightening of fiscal policy and monetary policy at the same time. It could cause the recovery to stagnate. Yet, this is the prospect we face. Tight fiscal policy and increasing interest rates.
Negative Real Interest Rates. We often talk about ‘normal’ interest rates. What this implies is an interest rate above the rate of inflation. This means savers should be able to get an increase in the value of their savings. A negative real interest rate means the value of savings is decreasing. At the moment, Bank of England, base interest rates are significantly below the CPI, therefore, in theory, savers are losing out.
This is mitigated by the fact banks are trying hard to attract deposits, therefore there are saving accounts which still offer positive real interest rates. But, in medium term, the Bank will want a return to ‘normal’ interest rates. This means, we could see base rates shoot up to 5%.
Fear Ultra Low Interest Rates may stoke Future speculative Bubble. The recent financial crisis was caused by excessive borrowing and speculation. The danger is that ultra low interest rates could stoke a future boom and bust in lending. That is a possibility, though banks are trying hard to increase bank reserve ratios. For example, mortgage lending remains restricted.
Where does that leave interest rates for 2012?
Some forecast a speedy return to 5% at the end of the year. (Recently, Bank of England Markets Director Paul Fisher warned interest rates could rise to 5% soon). They see signs of economic recovery and to keep inflation in check we need a return to normal interest rates. That might sound a huge jump, though the impact may be muted because many banks didn’t pass on the interest rate cut on to consumers.
However, others argue there is danger of stagnating growth. Higher taxes and spending cuts will reduce growth. Given high unemployment, we need monetary policy to be loose to offset the fall in government spending. Also, though CPI inflation is slightly above target, it is has not led to wage inflation and CPI inflation may fall back, if energy prices stop rising.
Overall, there is strong likelihood interest rates will rise in 2012. The big question is how early and how quickly. This will depend on the pace of economic growth and the stubbornness of inflation.
Low Growth – High Inflation. Firstly, after a deep recession the economic recovery is weak. In theory, high unemployment and low growth should lead to low inflation. However, due to rising energy and food prices, we have inflation above target. This presents a conundrum for the Bank of England – do they increase interest rates to reduce inflation or do they keep interest rates low to boost spending and help reduce unemployment?
High Unemployment – Yet tight Fiscal Policy and tight Monetary Policy. Usually at this stage in the economic cycle, you wouldn’t want a tightening of fiscal policy and monetary policy at the same time. It could cause the recovery to stagnate. Yet, this is the prospect we face. Tight fiscal policy and increasing interest rates.
Negative Real Interest Rates. We often talk about ‘normal’ interest rates. What this implies is an interest rate above the rate of inflation. This means savers should be able to get an increase in the value of their savings. A negative real interest rate means the value of savings is decreasing. At the moment, Bank of England, base interest rates are significantly below the CPI, therefore, in theory, savers are losing out.
This is mitigated by the fact banks are trying hard to attract deposits, therefore there are saving accounts which still offer positive real interest rates. But, in medium term, the Bank will want a return to ‘normal’ interest rates. This means, we could see base rates shoot up to 5%.
Fear Ultra Low Interest Rates may stoke Future speculative Bubble. The recent financial crisis was caused by excessive borrowing and speculation. The danger is that ultra low interest rates could stoke a future boom and bust in lending. That is a possibility, though banks are trying hard to increase bank reserve ratios. For example, mortgage lending remains restricted.
Where does that leave interest rates for 2012?
Some forecast a speedy return to 5% at the end of the year. (Recently, Bank of England Markets Director Paul Fisher warned interest rates could rise to 5% soon). They see signs of economic recovery and to keep inflation in check we need a return to normal interest rates. That might sound a huge jump, though the impact may be muted because many banks didn’t pass on the interest rate cut on to consumers.
However, others argue there is danger of stagnating growth. Higher taxes and spending cuts will reduce growth. Given high unemployment, we need monetary policy to be loose to offset the fall in government spending. Also, though CPI inflation is slightly above target, it is has not led to wage inflation and CPI inflation may fall back, if energy prices stop rising.
Overall, there is strong likelihood interest rates will rise in 2012. The big question is how early and how quickly. This will depend on the pace of economic growth and the stubbornness of inflation.
Food Inflation
Food Inflation
When food prices rise in the developed world it is an inconvenience, something to grumble about. But, when food prices rise in the developing world it can make difference between going hungry and getting enough to eat.
Food inflation is volatile. Agricultural prices tend to fluctuate because demand and supply are both inelastic and supply can vary due to the weather. However, despite the usual volatility, food prices seem to be showing a strong upward movement, reaching record highs in recent years.
For example, in India a booming economy has GDP expanding at 9% a year. Official inflation is around 7%, but, headline food inflation is more than double at 17.8% 1
The Food and Agricultural Organisation said its food price index rose to 214.7 points in Jan 2001, above the peak of 213.5 set in June 2008. 2
What is Causing Food Inflation?
There have been short term supply constraints such as bad weather. However, there is also evidence of increasing long term supply constraints such as loss of farming land due to global warming.
Increased use of bio-fuels. Growing crops for energy rather than food production.
Rising Demand. Rapid economic growth in China and India is increasing demand for more resource intensive foods. As incomes rise, people tend to spend a higher % of income on meat and dairy products. These require more intensive land cultivation. e.g. crops are used to feed cattle, therefore the supply of crops for food has decreased.
Implications of Food Inflation
It is important to bear in mind food price spikes tend to be temporary and often the result of local bottleneck shortages. Whilst rising food prices tend to make headlines, later falls in prices tend to make less news. However, even temporary periods of rising prices can cause widespread hardship to those on the breadline. Agriculture is a market when relying on free market forces can cause much hardship. Though often difficult to implement, there is a necessity for guaranteeing supply and minimum prices of at least the basic food stuffs such as rice and wheat.
Also, the rise in food prices cannot just be put down to short term factors. A growing population and growing affluence will inevitably place greater demand on agriculture. If environmental pressures continue to grow the pressures on both supply and demand could lead to food prices becoming more common.
It is true that we gloomy Malthusian prophecies have often proved false. But, that doesn’t mean we can always count on increasing food supply to meet demand. There are diminishing returns to green technology, especially when the weather erodes away our fertile land.
Whilst we worry about Space travel, quantitative easing and marvel at the growth of electronic technology, it is rather humbling that the greatest problem of mankind still seems to revolve around food and water.
When food prices rise in the developed world it is an inconvenience, something to grumble about. But, when food prices rise in the developing world it can make difference between going hungry and getting enough to eat.
Food inflation is volatile. Agricultural prices tend to fluctuate because demand and supply are both inelastic and supply can vary due to the weather. However, despite the usual volatility, food prices seem to be showing a strong upward movement, reaching record highs in recent years.
For example, in India a booming economy has GDP expanding at 9% a year. Official inflation is around 7%, but, headline food inflation is more than double at 17.8% 1
The Food and Agricultural Organisation said its food price index rose to 214.7 points in Jan 2001, above the peak of 213.5 set in June 2008. 2
What is Causing Food Inflation?
There have been short term supply constraints such as bad weather. However, there is also evidence of increasing long term supply constraints such as loss of farming land due to global warming.
Increased use of bio-fuels. Growing crops for energy rather than food production.
Rising Demand. Rapid economic growth in China and India is increasing demand for more resource intensive foods. As incomes rise, people tend to spend a higher % of income on meat and dairy products. These require more intensive land cultivation. e.g. crops are used to feed cattle, therefore the supply of crops for food has decreased.
Implications of Food Inflation
It is important to bear in mind food price spikes tend to be temporary and often the result of local bottleneck shortages. Whilst rising food prices tend to make headlines, later falls in prices tend to make less news. However, even temporary periods of rising prices can cause widespread hardship to those on the breadline. Agriculture is a market when relying on free market forces can cause much hardship. Though often difficult to implement, there is a necessity for guaranteeing supply and minimum prices of at least the basic food stuffs such as rice and wheat.
Also, the rise in food prices cannot just be put down to short term factors. A growing population and growing affluence will inevitably place greater demand on agriculture. If environmental pressures continue to grow the pressures on both supply and demand could lead to food prices becoming more common.
It is true that we gloomy Malthusian prophecies have often proved false. But, that doesn’t mean we can always count on increasing food supply to meet demand. There are diminishing returns to green technology, especially when the weather erodes away our fertile land.
Whilst we worry about Space travel, quantitative easing and marvel at the growth of electronic technology, it is rather humbling that the greatest problem of mankind still seems to revolve around food and water.
Difference between CPI and Core CPI
The difference between CPI and PCE seemed relatively insignificant. However, a big issue is the difference between CPI and Core CPI.
CPI is the consumer price index. A measure of the cost of living for the typical person.
Core CPI is the CPI – energy and food prices.
Energy and food prices are removed because they have tendency to be highly volatile.
This graph of Core CPI and CPI in the US shows how volatile CPI can be.
Core CPI
Source: 1
Blue line – CPI
red line – Core CPI – without volatile prices.
Policy Implications of Core CPI
This clearly has policy implications. If we look only at CPI, monetary authorities may be inclined to change interest rates more frequently. For example, in 2008, we had a rise in energy prices causing cost push inflation of 5%, a few months later we were in deep recession. In other words CPI can give a misleading impression of underlying inflationary pressures. If you tighten monetary policy because of temporary food and energy inflation, you create potential for slowing down economy. Similarly when there is a slump in energy and food prices, there is a danger monetary policy can become too lax, creating future underlying inflation.
It is true that consumers have to face rising food prices and rising energy prices. I don’t suggest indexing linking pensions to Core CPI. This could give pensioners an increase in benefits less than there cost of living.
However, it is important for the Bank of England and monetary authorities. It explains why the Bank of England haven’t been increasing interest rates in response to inflation above target.
There is a danger temporary cost push inflation could lead to higher inflation expectations. But, this is not convincing.
CPI is the consumer price index. A measure of the cost of living for the typical person.
Core CPI is the CPI – energy and food prices.
Energy and food prices are removed because they have tendency to be highly volatile.
This graph of Core CPI and CPI in the US shows how volatile CPI can be.
Core CPI
Source: 1
Blue line – CPI
red line – Core CPI – without volatile prices.
Policy Implications of Core CPI
This clearly has policy implications. If we look only at CPI, monetary authorities may be inclined to change interest rates more frequently. For example, in 2008, we had a rise in energy prices causing cost push inflation of 5%, a few months later we were in deep recession. In other words CPI can give a misleading impression of underlying inflationary pressures. If you tighten monetary policy because of temporary food and energy inflation, you create potential for slowing down economy. Similarly when there is a slump in energy and food prices, there is a danger monetary policy can become too lax, creating future underlying inflation.
It is true that consumers have to face rising food prices and rising energy prices. I don’t suggest indexing linking pensions to Core CPI. This could give pensioners an increase in benefits less than there cost of living.
However, it is important for the Bank of England and monetary authorities. It explains why the Bank of England haven’t been increasing interest rates in response to inflation above target.
There is a danger temporary cost push inflation could lead to higher inflation expectations. But, this is not convincing.
Wednesday, January 5, 2011
Accounting for Payroll: A Comprehensive Guide
Accounting for Payroll: A Comprehensive Guide
Product Description
A one-stop resource for setting up or improving an existing payroll system
The most comprehensive resource available on the subject, Accounting for Payroll: A Comprehensive Guide provides up-to-date information to enable users to handle payroll accounting in the most cost-effective manner.
DOWNLOAD:
Code:
http://hotfile.com/dl/92732846/aaf0475/0471251089.rar.html
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