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Purchasing power is the amount of goods or services that could be purchase with a unit of currency. The goal of the big mac index was to review and analyze the rate at which currencies move toward equality to purchase an item specifically a burger. The country I reviewed was Switzerland. Their currency is called the Swiss Franc and currently it is 30% overvalued in comparison to the US dollar. Since the Swiss Franc is overvalued this means that their imports will be cheaper than exports, which is good for countries that focus primarily on imports. The purchasing power in Switzerland will be higher so a smaller amount of currency in America will equal a higher amount of currency in Switzerland gaining you more goods or services with a unit of currency. Post here: I went to the economic website and learned about the Big Mac index. The Big Mac index was created to compare the cost of a Big Mac in us with the price of a Big Mac in another county. This is then compared to the difference in how each country values a dollar. The countries are then sorted from most overvalued to most undervalued, with the united stated dollar being the base. Costa Rica was the most undervalued compared to the United States. This shows that the purchasing power in Costa Rica is much higher than in the United States. This means that if I were in Costa Rica with $20, I would be able to purchase more Big Macs than I could in the united states with the same $20. I don’t know that this is the best test for the standard of living because many other things affect the standard of living other than the cost of a Big Mac. Costa Rica does have a much lower cost of living than the United States. The wage level is also lower in Costa Rica compared to the United States.
Post here: Manufacturing going more abroad has shown that there is an opportunity for a company to make more margin profits in an ever-growing global economy. The effect it has on the economy has been seen over the last 50 years. The reason for the shift to manufacturing going abroad is because the labor and material costs are cheaper than they are in their traditional domestic markets. One company I can think of is Nike which they were traditionally about keeping jobs locally. The company was founded in Eugene Oregon where they still reside today. Their headquarters hold a majority of their marketing, finance, R&D, and senior management. With that being said their manufacturing is done in Malaysia because of the opportunities to make more profits and save on material and labor costs. Part of the reason why this works is that they are a global brand that has a reach and high market share against their competitors. Overall, they have had a lot of upsides with their use of abroad manufacturing until 2020 when manufacturing and supply chain has been drastically affected. Because the manufacturing is done abroad and the demand for their goods is high has caused out stocks at a much faster rate which affected their profits.
Post here: “The China government uses its investment in the United States as a way to depress the value of their currency, the renminbi. The United States government did balk at China over their constant bombardment in foreign markets” (Mankiw, 2021). China can export their goods here and make their goods less expensive. This is not good for the U.S. economy. People want a good bargain, so they go for the lower-priced good much of the time. The problem with buying cheaper is that the good may not last and will have to be replaced. Therefore, the buyer will have to open their wallets again to buy another product. Even more, this stunts the American labor force and the manufacturers on American home soil by not getting the business. This creates a deficit in the American economy making them vulnerable to foreign investors. Post here: I think you made a great model. I would have never thought of sleep and productivity as a correlation. However, I don’t see sleep and productivity as a correlation. I have to be productive every day no matter what even when I get little to no sleep. I may be sluggish on days I get less than 8 hours of sleep but I have a baby and a fiance and a household I have to always attend to which means productivity every day no matter the amount of sleep I get. Is there a correlation between productivity and hours of sleep? Explain.
Post here: The 0, 1 integer model is used in my day to day life when I’m figuring out how to allocate my “free time”. I put that in quotes because there’s little to none. I work a 40 hour week schedule and then after work I’m in school to complete my MBA. In the little time in between, I have I have to distribute well / efficiently to have time for my family, myself, mental health, physical health and then some miscellaneous/social time. Overall time management would be a key factor to interegrate 0,1 model; it would help by defining what key factors to spend more time into and allocate specific times to get things done. Proper implementation would enable me to be more vigilant, work harder and overall better efficiency.
Post here: The combination of investments in a portfolio is referred to as asset allocation. It refers to the percentage of stocks, bonds, and cash in a portfolio, and maintaining the proper asset allocation is perhaps the most essential choice long-term investors can make. Stocks have historically outperformed bonds in terms of long-term returns but at the same time, stocks are more volatile (Berger, R., 2022). Bonds in a portfolio minimize volatility but have lower projected returns. For my own retirement portfolio, I follow the growth model where 70% of investments are allocated in stocks and the remaining 30% are in bonds. One model that I have considered following has been the target-date retirement model which is generally classified by the year in which the investor plans to retire (Berger, R., 2022). The target-date model takes an investor’s money and divides it among a number of diversified mutual funds generally including investments in domestic and international markets (Berger, R., 2022). Post here: I would utilize a linear model and incorporate the amount I wish to invest and desired ROI percentages based on each election, such as stock, mutual funds, bonds, cryptocurrency, etc. Next, I would input those values using the minimax and maximin approach in order to hone in on a desired allocation mix while placing emphasis on reducing the overall risk of the assets. Additionally, I would consider the average inflation rate for any reserves and assets as well. In order to develop a portfolio that provides the best return possible with minimum risk, it is necessary to maximize the minimum return for the portfolio (Anderson et al., 2016). Post here:
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