Macro economics short answers Essay Example | Topics and Well Written Essays - 250 words

Macro economics short answers - Essay Example (15 points) Some institutions and institutional arrangements boost economic growth. Institutional arrangements outline the formal and informal rules of the game that direct how people interact. These arrangements form incentives and outline expected and tolerable forms of behavior in social interaction. The institutions that boost economic growth include: Productivity is referred to as the ratio between the output quantity and the quantity of inputs. It determines how well production inputs, like labor and capital, are being employed in an economy to create a specified level of output. Factors that lead to increases in productivity include capital accumulation, more access to natural resources, technological innovation, transformation in labor processes like division and specialization, improvements in business practices and transformation in patterns of trade. Great depression was as result of crash of the stock market. Once the stock market plunged, fearful that banks would fail, people started to withdraw their money. Almost overnight, they put thousands of banks under threat. The more money people withdrew, the more banks failed, and the more banks failed, the more money people withdrew. By 1933, nearly 11,000 of the nation’s 25,000 banks had fallen. In order to boost economic activities the Fed was to put in place policy measures geared toward increasing money supply in the economy but it did not do that in time leading to economic

Executive Memo on Accounting for Pensions and Elimination of Segments Essay

Executive Memo on Accounting for Pensions and Elimination of Segments - Essay Example As stated in paragraph 25 of IAS 19, there are two kinds of pensions: defined contribution and defined benefit plans. In defined contribution plans, the company’s actual obligation is just the amount it agreed to place in the fund. With this plan, the employee bears the risk if the total contribution is not enough to cover the expected benefits. In defined benefit plans, the risk is borne by the employer because they have to pay the amount of the agreed upon benefits and adjust their contributions accordingly to finance these benefits. For defined contribution plans, the accounting and reporting requirements are simple. The company merely recognizes the required amount to be contributed as an expense. A liability will be recognized if the actual payment to the fund is less than the required contribution and a prepaid expense will be recognized if the actual payment to the fund is more than the required contribution. For disclosure or reporting purposes, the company is only req uired to disclose the expense amount and the contributions pertaining to key management personnel. For defined benefit plans, the accounting processes are much more complex. If the company utilizes defined benefit plans, its expense will be based on calculations using actuarial techniques. This is because there are various assumptions that go into the calculation process. In addition, the company’s legal obligation is not the only factor for calculating the pension expense amount, there are also constructive obligations resulting from the company’s informal practices, those that could not be changed without incurring severe damage in the relationship between the employer and the employee. The reporting for defined benefit plans is more rigorous. In general, the company will need to make adequate disclosures that will provide enough information to the financial statement users about the nature of the pension plan and any impact on the financial statements if there are c hanges in the plan. Specifically, the company is required to disclose its accounting policy for the recognition of actuarial gains and losses. It also needs to give a general description of the plan. It also needs to show three (3) reconciliations, as applicable, for the opening and closing balances of the present value of the obligatio