Eco 13 Assignment 2015-16 Flu Season

ECO 13
Course Title : Business Environment
Assignment Code : ECO 13 /TMA/2017-18
Coverage : All Blocks
Maximum Marks: 100
Attempt all the questions.
1. What is meant by business environment? List economic and non-economic components
of business environment. Explain cultural environment of India.
(5+5+10)
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2. Explain why India’s economy is called “A Mixed Economy”. Describe different sectors
of Indian economy.
(5+15)
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3. What were the objectives of the “Industrial Policy 1991”? Discuss various policy
measures adopted for achieving these objectives. Evaluate briefly the success of this
policy.
(5+10+5)
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4. Distinguish between the following:
a) Statutory and Non-Statutory Measures of Settlement of Industrial Disputes
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b) Foreign Direct Investment and Portfolio Investment
(10+10)
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5. Write short notes on the following:
a) Role of foreign capital in industrialization
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b) Balance of payments
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c) Advantages and disadvantages of free trade
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d) Functions of World Trade Organization
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Afflluence Writng Service
ECO 13
Course Title : Business Environment
Assignment Code : ECO 13 /TMA/2017-18
Coverage : All Blocks
Maximum Marks: 100
Attempt all the questions.
1. What is meant by business environment? List economic and non-economic components
of business environment. Explain cultural environment of India.
(5+5+10)
CLICK HERE TO GET ANSWER

2. Explain why India’s economy is called “A Mixed Economy”. Describe different sectors
of Indian economy.
(5+15)
CLICK HERE TO GET ANSWER

3. What were the objectives of the “Industrial Policy 1991”? Discuss various policy
measures adopted for achieving these objectives. Evaluate briefly the success of this
policy.
(5+10+5)
CLICK HERE TO GET ANSWER

4. Distinguish between the following:
a) Statutory and Non-Statutory Measures of Settlement of Industrial Disputes
CLICK HERE TO GET ANSWER

b) Foreign Direct Investment and Portfolio Investment
(10+10)
CLICK HERE TO GET ANSWER

5. Write short notes on the following:
a) Role of foreign capital in industrialization
CLICK HERE TO GET ANSWER

b) Balance of payments
CLICK HERE TO GET ANSWER

c) Advantages and disadvantages of free trade
CLICK HERE TO GET ANSWER

d) Functions of World Trade Organization
CLICK HERE TO GET ANSWER

Afflluence Writng Service

By Guest Blogger Ryan Lewenza

Without completely spoiling for those who live under a rock and haven’t seen the most recent season of House of Cards, let’s just say that the walls are closing in on the protagonist President Underwood, and that things are about to unravel for him in the next season. Many believe the same is destined for the average Canadian household, and in turn the Canadian economy, given our record debt levels and now rising interest rates. While I share these concerns, my conclusions are far less dire than others, which is why I don’t yet own a life supply of tuna cans, a shotgun, and a zombie apocalypse survival kit. In this week’s blog I examine the state of the current Canadian household income and balance sheet, and try to express a more balanced outlook for the average Canadian and our economy.

First, and stating the obvious, Canadians have thrown caution to the wind by dramatically ramping up their debt levels, in large part to fund rising real estate purchases. Total household debt increased to $2.07 trillion in July, which equates to a compounded growth rate (CAGR) of 10.7% since 1980. Of this $2.07 trillion total debt, mortgages account for $1.48 trillion or 71.5%, which is up from 66% in 1980.

Looking at income growth over this period, total Canadian household disposable income has increased from $170 billion in 1980 to $1.2 trillion currently, which equates to a CAGR of 7.1%. So with debt rising at a much higher rate than income growth, we get that rising debt to household income ratio seen below, which currently sits at 170%, up from just 87% in 1990.

As a huge Elvis Presley fan, I can’t help think that our current situation resembles “the King’s” later years when he tipped the scales at over 300 pounds and was gorging on peanut butter, banana, and bacon sandwiches like they were M&M’s. I really hope the average Canadian doesn’t end up like Elvis, slumped over on the toilet with a bad case of constipation or even worse.

Canadian Household Debt and Income Growth

Source: Bloomberg, Turner Investments

 

Canadian Household Debt to Income at New Record High

Source: Bloomberg, Turner Investments

Looking at the debt and income statistics one might prematurely conclude that the average Canadian, and our economy, is for the lack of a better term, screwed. We believe this is a bit simplistic and a stretch.

First, job growth in Canada remains very strong which is helping to support income growth. Over the last twelve months the Canadian economy has added 375,000 new jobs with income growth up 3.8% Y/Y. Yes we see interest rates grinding higher which will put additional stress on Canadians over time, but if the labour market remains strong then we expect income growth to hold up, helping to service the higher debt costs.

Second, household consumption is not the only driver of an economy. In Econ 101 we learned that every economy is driven by four main factors. Recall GDP = C (consumption) + G (government) + I (investment) + X (net exports). Even if consumption slows down, which is our belief, then other areas may be able to pick up the slack. With the US and global economy improving we see the potential for higher exports, which would help our manufacturing, resource and other exporting industries. Business investment, which was crushed during the 2015-16 oil collapse, is expected to rebound in the coming years, and government spending could add to economic growth as infrastructure spending picks up.

Third, we saw very similar debt to income statistics in the US prior to the financial crisis with their household debt to income ratio peaking at 168% in 2007. Since then we’ve seen this ratio decline steadily over the years to 140% today. Note below how over this period the US economy continued to grow, albeit at a lower growth rate.

I think this example is pretty instructive as it shows that a declining US household debt to income ratio resulted in a lower growth rate but not a complete collapse in their economy (of course excluding the 2008-09 recession which was short-lived).

So that’s what I think we should expect from the Canadian consumer and economy in the coming years as the average Canadian household begin to address their bloated debt levels and begin to deleverage. We should expect to see lower consumption, and in turn GDP growth, but not a complete meltdown in our economy as some predict.

Bringing it back to my Elvis analogy, instead of Elvis killing himself with excessive eating and a lack of exercise, Canadians are likely to join a Weight Watchers clinic for debt, and slowly over time reduce their bloated debt levels. This will likely result in lower economic growth over the next few years, but not slumped over, dead on the toilet as “the King” did on that sad day.

US Household Debt to Income and GDP

Source: Bloomberg, Turner Investments
Ryan Lewenza, CFA,CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

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