Windfall tax is the tax that is put on companies or industries when high profits are made. This increases the government’s revenue, and helping the society by providing social services and other benefits to citizens, raging from improving roads to increasing military strength. The windfall tax revenue can also allow the government to address the debt and may strengthen the economy. This on the other hand can affect companies and industries that have been affected by the windfall tax as it causes financial disadvantages for firms.

Question 2
Identify the reasons why the Zambian government imposed a windfall tax on the mining companies.

Question 3
Explain, using evidence from the article, why the Zambian government does not consider its debt situation too problematic.
Question 4
Examine the conditions multilateral agencies, such as the IMF or World Bank, could require the Zambian government to adopt if they were approached for a concessionary loan, and the rationale for doing so.

A microcredit system, or microcredit scheme, is a system in which small credits are provided to low-income people, usually in less economically developed countries (LDCs). Usually, financial institutions, like banks, and NGOs provide these loans. When banks provide them, they usually charge a fairly high interest rate because of the risk of lending to the poor. NGOs, or even banks when subsidized by nations wanting to encourage growth and development, charge lower interest rates. The scheme is aimed at allowing the poor of LDCs to accumulate capital and encourage entrepreneurial spirit, both of which lead to growth and development. Microcredit schemes are usually seen as a positive step in development as they allow for money to be used in a fashion that most suits the requirements of the people and encourages development from “the bottom up.” Muhammed Yunus received the global peace price for his pioneer work in micro-financing.

Question 2
Examine the benefits of using microcredit systems in developing countries to promote economic development.

There are several benefits in using microcredit systems in developing countries to promote economic development. First of all, it empowers women. For instance, in India some of the main distributors of microcredits are women self-help groups. By having more economic power and the ability to start their own businesses, women gain more status. Usually, female empowerment is viewed as positive for economic development as it leads to equality and higher efficiency in an economy by utilizing the entire labor force. The idea of starting businesses is also very important. Entrepreneurial spirit is one of the main factors of production and allowing especially the poor to begin their own businesses allows them to work, fighting unemployment, and increases productivity. Self-sufficient households are also more likely to send their children to school, increasing their chances of breaking the poverty cycle. That would further improve the labor force, which is one of the main factors in economic development, because the quantity and quality of the labor force is decisive in productivity. More educated laborers can produce more quantity and higher quality products and earn more money. Another positive effect is that the microfinance system allows for the accumulation of capital, another huge factor in development. The quantity and quality of capital allows for poorer people to open their own businesses and be more productive; for instance, if an Indian woman buys a sewing machine, she will be more productive than if she did everything by hand. That way, she will earn more money, raising her standard of living.

Question 3
Examine the problems associated with operating microcredit systems and whether these could contribute to a worsening in the levels of poverty.

Besides the benefits, there are also some problems associated with operating microcredit systems, which could contribute to a worsening in the levels of poverty. For example, microcredit systems tend to charge rather high interest rates, especially if loan sharks or more shady institutions lend them. Some poorer people have no choice but to take up those loans, which can result in financial and physical danger. Financially, they could face high interest rates at over 100% annually; physically, loan sharks retrieving their money could harm them. In one Indian region alone, two financial institutions had to be closed for the method they used to retrieve their funds. In addition, microcredits don’t always reach everyone. Banks usually concentrate on lower risk, close-to-poverty line people, so either vulnerable non-poor or moderately poor. In that sense, the microcredit scheme does not reach all the poor, but merely the poor the banks and loaners see as fit to take on credits. Also, in some cases of females taking out loans, the men spend the money and leave the women with the credit risk, in a few cases even leading to an increase in domestic violence.

Question 1

Explain the importance of human capital in contributing to economic development.

Human Capital is the knowledge and personality attributes that allow wrok force and labor so people can produce economic value. “Human capital is vitally important for an organization’s success.” (Crook etal., 2011) Human Capital is also the increase of education and experience, which is very important for an economic development. Human capital increases the rate s of of return, in which helping the growth of the economy. In otherwords if there is an increase in the effectiveness of a workforce, it can help with the efficiency and growth of an economy, thus helping the development of the economy.

Question 2

 Explain the difference between economic growth and economic development.

Economic Grwoth primarly focuses on the growth of the economy, or GDP which may be shown with the increase of income or HDI for instance, it shows economic growth.

On the other hand, economic develepment shows more of an improvement in health, education, and other human welface. Economic development can show increase in standards of living in a country. Overall, economic grwoth is a narrower concept than economic development.

Question 3

Discuss the view that the achievement of higher economic growth rates should be the priority of developing economies.

As mentioned earlier, economic growth is the key to develop a country. Having a higher economic growth rate should be a priority for any nation as it increases output of a nation’s economy and growth. The growth helps develop the overall nation as a whole and allow for more opprotunities for employment, income increase, increase in GDP, etc. The economic growth rate is the key to a succesful country/nation.

Question 4

 Explain what is meant by sustainable development.

Sustainable development refers to the economic development while having a nuteral/safe effect to the environment. As a developing economy, there are steps needed to reach their growth, some which may be polluting the water, cutting down forests, destroying biodiversity, etc. It may seem like a thing to be ignored as the main goal is to increase the growth, but in the long run, it harms the environment and people, thus causing acts such as taxing properties and ways to help restrain from the environmenting from getting affected even further.
Question 5

Explain how extending property rights and land ownership can help bring about more sustainable development.

By extending property rights and land owner ship it can help bring about more sustainability with the development as governments can intervene to sustain the resources and the use of environment. The government would be able to protect the property with the ownership and is able to contain the damages amongst the environment.

Question 6

 Discuss the view that economic growth will inevitably conflict with sustainable development.

As mentioned previously in question 4, economic growth may be a possitive thing, but is a negative aspect for a sustainable development. For a economic growth to occur it required four key things, one, which is land. Land is the obsticale that interferes with having a sustainable development as there is an increase in demand for land to expand their growth. Negative externalities such as pollution, China, can effect the environment negativly. It is very hard to have a economic growth without awknowleding the risks for a sustainable development.

I thought it was a good experience because I think it prepared us for the future, especially for me because I am hoping to get into the business, and I would have to start preparing for these kinds of presentations and pressures.

With the questions and proposals they had, it made us think and look at the bigger picture.

The processing was fairly difficult at first, for there were different obstacles and different options to think about, and various times, we would have to change our plan to make it fit our needs. Since each of us had our own ideas, we would collaborate them and see how we could combine them to make a better solution that everyone would be satisfied.

Another way to help with the supply side is if the government provides money to produce electric, or hybrid cars, which would help decrease the purchase of the oil, which is increasing in price. If the Government provides the money, they would be in debt, but in the long run, it would help profit for the company, and especially for Jorgenson to increase their sales.

There are several ways to decrease the Inflation that has been rising and also doing so without increasing the government debt. But either way, the solution for this would cause a problem and one side of the group would be affected.

In response to this issue, there are a number of possibilities:

Open Market Operations –> buy and sell government securities to commercial banks and general public
Reserve Ratio –> decrease or increase money reserves in banks to increase or decrease circulation
Discount Rate (interest rate) –> increase to decrease money supply / decrease to increase money supply

One of the ways that can help the Silver Cougars of America is to lower the interest rate. This would cause an increase in inflation, but it would help lower unemployment, but increase the AD. If this happens though, that would mean that the government would have to use the fiscal policy and use transfer payment (giving money to the people) in order to reduce the inflation. This would mean that the government would be in depth, but would also mean in the long run they would profit again.

‘One good way to help unemployment without increasing government debt is to use supply side policy from fiscal policy. The supply side policy involved is removing the unemployment trap. Unemployment trap is where some people earn more on benefits than from working and so find it economic sense to stay out of work and draw benefit. The unemployment trap means that the extra income coming from work is insufficient to encourage people to seek a job. This policy is effective, however, the fairness involve in this policy is debatable. Another way is privatization. This is the selling of state or publicly owned assets to the private sector. Many developed countries have also privatized state-owned industries. By doing this, it is hoped that firms will become more efficient, competitive and better able to provide a consistent service of high quality. In addition, increase government income. Privatizing them in theory would expose them to competition and market forces therefore improving efficiency.’

The nominal and Real GDP for America has been increasing which is a positive sign that shows that the economy has been growing. During the 1920′s and 1930′s US was in the Great Depression and as you can see for many of the stats, there is a deep fall. In 1933 as both the real and nominal GDP has decreased phenomenally.

Looking at the interest rate for the past decades, the discount rate, also known as the interest rate has been all over the place. It has been moving up and down and currently, has been decreasing to a very low number. I think that this is due to the current economy that the situation is in at the moment.

The consumer Prices has been increasing from 1929 throughout all the way to the current time.
The rate of inflation has also been moving up and down. At some years, there was a peak when the inflation had been risen up very high; 1940, 1975, 1980. During 1940, it was the time when USA was recovering from the great depression, and the inflation was high for that reason. Also it was the time during World War 2, and the government spending increased rapidly which caused the inflation to increase.
1975 was a period when there was a recession, when the oil prices had doubled and there was a economic crises, and following 1975 throughout to 1980, the inflation kept growing, and the recession grew worse and worse. As USA started to settle down, it was able to slowly reduce the inflation the following years.

Lastly the Public debt for the US has been increasing every year. As US borrows to cover up for their cash flow, the debt also increases. And for the past decades, it has been increasing and increasing, and currently, has been in the trillions and is still increasing as we speak.

Terms:

Leading:
• Leading economic indicators:
Change before the general economic activity
• Predict direction economy is moving
• Examples
Money supply
Change in sensitive material prices
New orders for consumer goods and materials
Contracts for orders for plant and equipment
New building permits for private housing units
Changes in business inventories
Vendor performance
Common stock prices
Length of the average work week
Initial claims for unemployment insurance
Change in consumer debt

Lagging
• Lagging economic indicators trail behind the economy
• Will not show an upturn even if the economy is growing
• Examples

Unemployment rate
Percentage change in CPI
Average duration of unemployment
Manufacturing and trade inventories
Commercial loans
Ratio of consumer debt to personal income
Change in labor cost per unit of output, manufacturing
Short-term interest rates

Coincident
• Coincident indicators move at the same time as
economic activity
• Examples

– Number of employees on nonagricultural payrolls
– Industrial production
– Personal income minus transfer payments
– Manufacturing and trade sales volume
– Civilian employment to population ratio
– Gross domestic product (GDP)

Due to the recent events that occurred in Japan; the Earthquake, tsunami, and the ‘meltdown’ of the radioactive reactors has caused serious problems to inflict damage on the agricultural economy. Due to the radiation, the government has planned to ban the food for sales, and simply not allow him to put it out in the market. Many of the Farmers are losing their income and money to take care of their cows, and plantations. Government are cutting their wages and making it fairly clear that they would not accept the food that they produce.
Looking at the graph, you can see that the AS would shift to the Left in the medium-long run. This would be because the decrease of farmers producing the food would decrease, and that would mean that there would be less of a supply, thus increasing the prices rapidly for the food.
The P goes to P1, and increases in Price as well, and the Y goes to Y1 which means that the quantity would decrease.