Unit 2 Scenario B Essay Example | Topics and Well Written Essays - 750 words

Unit 2 Scenario B - Essay Example When the savings rate increases, there is typically less consumption, as the consumer propensity to purchase goods and services becomes less when disposable incomes decrease. The marginal propensity to consume is equal to the change in consumption divided by the change in disposable income. For example, a consumer who gets a raise at work will have a choice as to whether to spend or save. So, assume that a person earns an additional $100 per week. The marginal propensity to consume would be equal to the new consumption habits of the individual divided by the $100 increase in pay. As such, if the individual decides that 5% of their new income should be saved, the marginal propensity to consume is $5 / $100, equaling .05. The spending multiplier is calculated as follows: 1 / MPS + MPI, in which the denominator equation is the marginal propensity to spend and the marginal propensity to import. When the savings rate increases, consumption begins to rise. As such, the multiplier will continue to decrease as consumption increases. Finally, there will be significant changes in consumption due to a savings rate decrease, represented by lesser consumption when savings amounts increase. At the same time, equilibrium GDP is affected and will increase in direct proportion with a decrease in savings and an increase in consumption at the same time. Mr. Mallon, I believe that the only real concern involving a diminished savings rate will be the long-term impact on the regional economy. From an individual consumer perspective, these changes would be barely noticeable, and the only thing affected would be either an increase in consumption or decrease, based on how much the consumer saves. However, over the broader landscape, when savings drop all across the nation and consumption increases, equilibrium GDP will be affected which will cause significant

Assignment IB Essay Example | Topics and Well Written Essays - 2250 words

Assignment IB - Essay Example International management recruitment and selection mechanism are exposed to various risks which the organizations are required to manage and select appropriate hedging techniques. The management plays the pivotal role in managing the risks faced by the organizations. Political risks are one of the important risks which the multinational firms quite often face. â€Å"Political risks are any governmental action or politically motivated event that could adversely affect the long-run profitability or the value of a firm† (Deresky, 2006, p.30). In order to manage the political risks identification of the risks is crucial. The risks faced by the firms may be firm-specific risks that affect the firms at the corporate level with conflict between the firm and the host government. In order to manage these risks the firms enters into negotiation of an investment agreement to purchase investment insurance and guarantees, to modify operating strategies in production, logistics, marketing, finance, organization, and personnel at the corporate level. Cultural and institutional risk evolve from host country policies with respect to ownership structure, human resource norms, religious heritage, nepotism and corruption, intellectual property rights, and protectionism. Managing cultural and institutional risks requires the MNCs to understand the differences, take legal actions in host country courts, support worldwide treaties to protect intellectual property rights, and support government efforts to create regional markets (Foreign Investment Decisions, 2005, p. 460).Closely connected with the political risks is the economic risk of the country. Various approaches are adapted by the mangers to manage the economic risks. The quantitative approach is devised to assign different weights to economic variables in order to produce a composite index used to measure the country’s creditworthiness over time and also to make comparisons with other countries. The problem of t his approach is to do not incorporate different stages of development among the countries it compares. The qualitative approach estimates the economic risks of a country by assessing the capability of its leaders as well as analyzing the types of policies they are likely to implement. The future dimension of the economy of the country can be estimated from this approach. In another approach which is the checklist approach, the researchers develop several vulnerability indicators that categorize the countries in terms of their ability to withstand the economic volatility. Majority of the corporations try to use the combination of all these approaches to manage the economic risks faced by the organization (Deresky, 2006, p.34). Repatriate turnover not only results in a loss of human capital investment for the MNC in general but also increases the risks the possibility of losing this investment to a direct competitor. To reduce the risk of repatriate turnover, MNCs will emphasis on the structuring of the short-term oriented HR practices inculcated with longer-term instruments such as integrating international assignments into individual career paths. Research has focused that the short-term assignees may fail to expand helpful relationships with local colleagues and customers at the same time facing increased risks of marital problems. One of the staffing policies in this case is