Monday, March 21, 2016

132. PGDBM - Organisation Behaviour (Sunday UNISA 20 March 2016)

The slides

131. the-humble-farm-boy-who-made-britain-great,+Humble+Farm+Boy&utm_campaign=learnlibertycs+15

Friday, March 18, 2016

130. Concepts a learner should be familiar with. Here are more (including some duplicates): SAMPLING OF CONCEPTS PREVIOUSLY DEALT WITH IN MBA EXAMINATION QUESTIONS (In no particular order - the page numbers refer to the managerial economic 2016 study guide) Barriers to trade – p 112 Property rights and the free market economy – p 10; p 127 GDP – how measured, issues related to p 67 (Real GDP, per capita GDP) The tragedy of the commons as an example of market failure p 129 (pollution, externalities) Production possibilities curve. What it means. P 9 (opportunity cost) The difference between economic development and economic growth (p 124) The ramifications of globalization (pro’s and con’s) p 97 Fiscal and Monetary policies p 71, p73 Absolute and comparative advantage p 107 Flow of goods and services p 15, p68 How prices are established on the market p 22 Relationship between price elasticity and income p 28 Monopoly (barriers to entry) p 52 Monopolistic competition p 52 Price floors and price ceilings p 22 (not there) Macroeconomic objectives p 67 -70 Monetary and fiscal policies p 71 Nationalisation and privatization p 81 Inflation (types of and graphically illustrate) p 69 Unemployment (how calculated, types). Consequences of unemployment. P 68 Exchange rates – types and implication p 116 Business cycles. x Specific question: Assume that the Demand for bread is represented by the equation P=10-2Qd and Supply by the equation P = 2 + 2Qs (not in curriculum) C.M. Heydenrych You do not have to know this - it is however useful:

Wagner's law suggests that a welfare state evolves from free market capitalism due to the population voting for ever-increasing social services. ... Wagner himself identified these as (i) social activities of the state, (ii) administrative and protective actions, and (iii) welfare functions.

Pareto & Bergson criteria for the resdidtribution of income.

Tuesday, March 15, 2016

129 Some comments to a learner on an assignment


Not too late.
 Here are some comments

1.       TOC – Give short descriptions of questions “Question 2:  Absolute and comparative advantage………………………………………………….4
2.       Pay attention to layout .
3.       Q 2.1 – 2.5 Your answers are too short!  Much more information should be provided on ALL questions. More “meat”, substance required
4.       Q 3.1 – 3.4 More detail, more use of sources to substantiate points made, in-line references MUST be included.
5.       Have you access to the internet? – it may be useful to have a look at  ; also CATO institute website; have a look at and others.
6.       Have a look at my article on how to tackle an assignment on (let me know if you have any problems accessing it).
7.       Your bibliography has some shortcomings: put an extra space between sources, did you actually have Ricardo in sight, if not quote the source in which he appeared; see if you could include a few more.

As things stand now it may not meet requirements. Hope you find this useful.

When is your submission date?

Let me know if there is anything else I can do to help.

Land line: 011 853 3000

1 Cedar Avenue  Auckland Park
Johannesburg 2092, South Africa

Sent: Wednesday, March 16, 2016 6:28 PM
To: Charl Heydenrych <>
Subject: Fwd: Economics 1 Assignment.

Hi Charl,

Not sure if it's too late to be sending this but please see attached Economics assignment.

Many Thanks in advance

Thursday, March 10, 2016

128 Cronyism

127. The South African Rand - March 2016

Explainer: how currency markets work and why the South African rand is falling

Fatima Bhoola, University of the Witwatersrand

Given that South Africa operates within a flexible exchange rate regime, the value of the rand, like any commodity, is determined by the market forces of supply and demand. The demand for a currency relative to the supply will determine its value in relation to another currency.

Theoretically, the demand for a floating currency – and hence its value – changes continually based on a multitude of factors. In the case of the rand, its current weakness can be attributed to a myriad of structural problems facing the local economy.

The main determinants of a currency’s value include demand for a country’s goods and services. This is closely linked to the growth and national income of its main trading partners.

Equally important is the domestic interest rate. If it is high it is likely to attract foreign capital, causing the exchange rate to strengthen. But high inflation can wipe out the benefit of high interest rates to foreign investors.

Additional factors serve to drive the currency down.

These include a current account deficit. The current account deficit gets bigger when a country spends more on foreign trade than it is earning and has to borrow capital from foreign sources to make up the difference.

This implies that a country requires more foreign currency than it is getting through sales of exports, and it supplies more of its own currency than foreigners demand for its products. This excess demand for foreign currency leads to depreciation in the value of a currency.

Factors such as political instability and poor economic performance can reduce investor confidence. This inevitably forces foreign investors to seek out stable countries with strong economic performance. Thus, a country that is perceived to have positive attributes will attract investment away from countries perceived to have more political and economic risk.

There is a further complication to currency movements. The buying and selling of currencies is no longer driven only by the need to facilitate trade but also by the demand for currencies as financial assets. This means that currencies are bought and sold like any other asset. Decisions by traders – to buy or sell a currency – can have a marked effect.

The impact of the turmoil in China

South Africa’s currency lost 26% of its value in the six months after turmoil gripped Chinese markets in June 2015. This was when the People’s Bank of China surprised markets by executing a 2% devaluation of the yuan and changing the way it traded its currency. The aim was to weaken the yuan to boost its export competitiveness.

This, coupled with slower economic growth, has aggravated the situation for South Africa as well as other African countries that rely on oil and mineral exports to China. Emerging markets most exposed to lower growth prospects and subdued commodity prices have seen the sharpest falls.

The rand is expected to remain under pressure with many analysts predicting that it will fall further in 2016. It is not alone. Many other emerging market currencies have been dealt the same fate.

But the rand is substantially weaker than it might have been. The sudden reshuffling of the finance ministry was seen as weakening one of the country’s key macroeconomic institutions and continues to undermine market confidence.

Implications of the weak rand

The weak rand has a number of implications for the country’s growth prospect. Firstly, the weakening currency carries the risk of pushing up inflation because imported goods are more expensive. This means that the South African Reserve Bank faces a difficult decision. It can keep interest rates low but then faces even higher inflation. This will only devalue the rand further.

If the central bank takes more aggressive action by raising interest rates, it risks stifling growth in an economy that is only growing at 1.5%.

The rand’s weakening could not have come at a worse time for South Africa. The country is suffering from the worst drought since 1992 which has increased food costs and pushed the farming industry into recession. The price of white corn, a staple food in southern Africa, has more than doubled on the South African Futures Exchange in the past year.

With large parts of the economy already in recession, coupled with worsening debt levels and the threat of credit-rating downgrades, it looks like the economy will contract. This implies that Finance Minister Pravin Gordhan has limited room to boost spending.

The weak rand will also see the cost of imported goods for consumers rise. In addition, while the rest of the world benefits from record low oil prices, the country’s weaker currency means it will not able to take full advantage of this and may face higher fuel prices in the near future.

On the flip side, the weaker rand does have some benefits. It is helping mines stay afloat. And gold mines could make profits again as the gold price has held up more than the prices of other minerals. There may also be a boost in tourism.

The weaker rand may also have short-term benefits for sub-Saharan countries importing substantial volumes from South Africa.

Finally there may be a boost for local exporters. But this could be stifled by the rise in the price of imported raw materials which will contribute to higher costs of production for manufacturers.

Is the rand over-traded?

In 2013 the South African rand was ranked as the 18th most-traded currency in the world. Surprisingly, while South Africa accounts for only 0.3% of the world’s daily foreign exchange market turnover, the rand accounts for 1.1% of worlds daily currency trading.

This difference is largely due to the daily trade taking place outside South Africa by non-residents. This is partly a result of virtually no exchange control restrictions for foreigners trading the rand but many in place for South Africans who wish to trade in foreign currency.

This has been highlighted as a further problem faced by the central bank in trying to influence the value of the rand.

The Conversation

Fatima Bhoola, Lecturer in Economics, University of the Witwatersrand

This article was originally published on The Conversation. Read the original article.

Monday, March 7, 2016

126. Once again: Minimum wages

Different job categories have different improvements in the marginal productivity: The improvement of many labour intensive jbs have not imroved in productivity as those that have benefited from technological advancements.

Friday, March 4, 2016

125. Useful stuff

Purpose This course is designed to provide executive-level training for officials from developing economies who deal with macroeconomic policy in their work. It provides critical training in economic analysis of the complex, integrated world economy. Background In today’s highly integrated world, the need to understand complex economic issues and translate them into appropriate and relevant policies becomes more demanding. This calls for government leaders and policy makers who can think critically, formulate policies strategically, and implement decisions responsibly. In particular, today’s Asian leaders especially from newly developed and less developed countries, must be equipped with decision-making skills to be able to respond quickly to unexpected shocks in the short run, effectively manage the economy in the middle run, and apply proper development strategies in the long run. In the face of these challenges, both solid academic training, particularly in economics, and a strong grounding in policy making, are essential. In response, the Asian Development Bank Institute (ADBI) and the Faculty of Economics, Keio University, launched a novel type of executive training program based on rigorous academic economics. As a unique combination of a highly regarded government think tank in Asia and a renowned academic university, ADBI and Keio University will offer a one-week intensive high-level course, exclusive to highly qualified officials and executives from central banks, finance ministries and regulatory agencies of developing Asian countries. The program helps participants obtain critical knowledge in economics and master the new skills they need to excel in this highly integrated global economy. Upon the completion of all the requirements, a certificate signed by the President of Keio University will be granted. For the current intake, the program focuses on contemporary macroeconomic policies in the globalizing world and consists of lectures on: Monetary policy Fiscal policy Capital market and financial sector issues SME finance and policies Economic growth The link with economic integration in the real economy. Based on these topics, a rigorous theoretical and empirical framework must be digested and developed to meet the current conditions after the global financial crisis where both vigorous economic activities and enhanced uncertainty exist. Rather than being afraid of openness, countries and economies should properly cope with globalizing forces in order to achieve sustained economic growth and a step up on the development ladder. Objectives To provide participants with the most contemporary and cutting edge understanding of macroeconomics To stimulate networking between the participants as a means of promoting cross-border collaboration Participants 15 high-level officials from ADB member countries. Participants come from important posts in finance ministries, central banks, and other related institutions. 10 private sector participants. Participant responsibilities To actively participate in discussions, share views and experiences, engage in networking, and collaborate on strategizing new approaches and understandings. Output Deepen the understanding of contemporary macroeconomics. Create a network of colleagues from different countries to share ideas on the topic. Group work and discussions Presentation materials and summary of proceedings to be uploaded on ADBI website. How to register By invitation only. Language English Partners Keio University

124. Economics 1A: Assignment notes


1.       Some class notes on the  PPF (ppc)

*Efficiency & Inefficiency
*Opportunity costs

Du Toit: P 7-9; P 19 -22

The alternative needs to be sacrificed. All the factors of production is fully utilized.
Any combination of the two can be produced.

The opportunity cost for producing A is the B that cannot be produced.

The different alternative combinations that can possibly be produced is represented by the PPC or frontier (given fixed production techniques (ceteris paribus)).

Scarcity is illustrated by the fact that all points to the right of the curve is unattainable
Choice is illustrated by the need to choose among the available combinations along the curve.
Opportunity cost is shown by the fact that more of one good can only be produced by sacrificing the production of the other good (negative slope of the curve) – there is a trade-off between the two goods.

Sacrificing A for B is cheap at the flat end of the graph and expensive at the more vertical end of the graph (and vice versa). Allocative efficiency is attained where the marginal value of A equals the marginal value of B!

3.1 Determinants of demand (apart from price) P32 in the study guide

3.2 Price ceilings and price floor

When the government imposes price ceilings on goods and services (as it does in some countries with rent controls) or with price floors (as it does in South Africa with the minimum wage legislation and in the US with agricultural price support programmes), it is in effect redefining the rights of sellers regarding the property that they sell. One of the purposes of economics is to analyse the effect of such imposition on their property rights and on the efficiency of trade and production.

3.3 Free Market Foundation legal challenge to making bargaining council agreements (on minimum wages) obligatory to all in an industry even if they were not party to the agreement. The reason for that is to protect the jobs of persons in the smaller more marginal businesses.

4. Differentiating characteristics - the differences lie in the market conditions in which the businesses operate. The state often determines these conditions (the are also "natural" in some cases). p243 du toit

THE DIAGRAM on page 233 in Du Toit is VERY IMPORTANT