Monthly Archive May 2016

Basic Issues In Macroeconomics|Macroeconomics

Basic Problems Studied in Macroeconomics - Income InequalityBasic Issues In Macroeconomics | Macroeconomics

Macroeconomics is the branch of economics that deals with the study of aggregate economic variables like aggregate demand, aggregate supply, price level, etc.

Basic Issues in macroeconomics are the economic problems that have often been confronted by different countries at different points of time. It helps to provide sound theoretical framework for investigating causes and effects of economic problem and provides the effective guidelines for finding appropriate policy that measures to solve the economic problem.

1) Unemployment:

Unemployment is the condition in which resources are willing and able to produce goods and services but are not engaged in productive activities. Analysis of unemployment especially labor employment goes hand in hand with the study of macroeconomics that emerged from the Great Depression 1930s.

Types of Unemployment

  • Cyclical Unemployment: This type of unemployment occurs high during recessions and depressions, and low during period of economic growth.
  • Frictional Unemployment: This type of unemployment occurs when workers take some time to move from one job to another job.
  • Seasonal Unemployment: This type of unemployment occurs because the demand for some workers varies widely over the course of the year.
  • Structural Unemployment: This type of unemployment occurs because some labor markets have more workers than the job available. Wages do not decrease to bring the market in equilibrium.

2) Inflation:

Inflation is the persistent increase in average price level in the economy. It is measured by inflation rate ,annual % rate in price index. As inflation rises every dollar you own buys a smaller percentage of a good or service.

3) Business Cycle:

Business Cycle is the fluctuation in economic activity that an economy experiences over a period of time. Business cycle is mainly defined in terms of expansion and recession. During expansion period economy is growing and during recession economy is decreasing.

4) Economic Growth:

Economic growth is attended by increasing the quality or  quantity of the economic resources such as land ,labour,capital and entrepreneurship. The five economic goals are Population growth ,investment, exploration, technological innovation and education. Other economic goals are employment, stability, efficiency and equity.

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Principles of Business Communication

7csPrinciples of Business Communication | 7C’s Of  Business Communication

Business Communication is the process of sharing information between two or more than two peoples may be working inside or outside the organization that is done for the  commercial benefit of the organization.

The message only becomes effective when the receiver understands the same meaning that the sender was intended to convey to his audience. For any business communication to be effective it  must have seven qualities which are called principles of communication and usually called 7C’s of Communication..

Principles

1) Clarity:

Clarity is one of the very important principle of communication. Clarity is very important in communication because words have different meaning to different peoples. Clarity should be improved by using familiar words and easy words that can be easily understood by people when spoken out. Clarity can be improved by using visual aids illustrations,etc.

 2)  Completeness:

Completeness is one of the very important principle of communication. A complete message is very important because it contains all the facts needed by the audience to respond to you in the way you desire.

3) Conciseness:

Conciseness is one of the very important principle of communication. Conciseness refers to getting your message possible in fewer words. Conciseness helps to save time and resources of the communicator as well as the audience.

4) Concreteness:

Concreteness is one of the very important principle of communication. The message only becomes specific, definite with relevant details. Concreteness refers to using facts ,figures image-building word or phrases which helps to make our message concrete.

5) Consideration:

Consideration  is one of the very important principle of communication. Consideration refers to keeping the receipient in mind while preparing the message. While preparing the message the communicator must know and consider every aspects of his audience.

6) Correctness:

Correctness is one of the very important principle of communication. Correctness not only comprises correct grammar,punctuation,pronounciation,spelling,etc but also proper body language,tone of speech ,etc. Correctness also means knowing when to be formal and when to be informal in a message.

7) Courtesy

Courtesy is one of the very important principle of communication. Courtesy means showing respect and concern for the recipient, being polite, sincere and thankful to others. It is the process of valuing the feelings of receiver.It is the way to avoid annoying or hurtful expressions and the ability to say ”thank you” or “sorry” to the audience when situation demands civility.

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Partnership Business| Finance

business-partnershipPartnership Business| Finance

Partnership Business is a form of business registered in the books of government ,which is carried on by some persons under one name for sharing the profits and with the agreement of participation in the transactions by all partners or a single partner acting to all.

 

Characteristics of Partnership Business

  • Formation:

In case of formation of partnership business there must be the involvement of at least two persons but the maximum number is not mentioned in the partnership act. For the registration of partnership firm it should be registered under the department of industry or commerce of Nepal  government.

  • Agreement:

There must be the mutual agreement among the partners in the partnership firm. The partners go into the agreement that bind them. Partnership deed is determined clearly before the commencement of business but it differs from business to business. This document may be written or oral. But it must be written so that disputes may be settled according to the provisions of agreement.

  • Unlimited Liability:

This is the prominent feature of partnership that the liability of each partner is not limited to the amount invested but his private property is also liable to pay the business obligations. If the debts is not cleared through the business the business, then the partner has to bear the losses or debts from their own properties as well.

  • Transferability of shares:

There is restriction to transfer share from one partner to another person without the consent of existing partners .So the investment in the partnership remains confined into few hands. One cannot easily transfer his/her share to others without the approval of other remaining partners.

  • Mutual Confidence:

The business of the partnership cannot be conducted successfully without the element of mutual confidence and cooperation of partners. So, the members must have trust and confidence in each other.

  • Investment:

Each partner contributes his share in the capital according to the agreement. Some persons become partners without investing any capital to the business. But they devote their name, energy and ability to their business instead of capital and receive profit.

  • Principal-agent relationship:

This relationship is based on mutual trust and faith among the partners in the interest of the firm. One partner is an agent as well as principal to other partner. He can bind the other person by his act.In the position of an agent he can make contract with another person  or parties on behalf of his concerned  firm. According to this every partner is an agent when he is working on behalf of other partners  and he is the principal when other partners act on his behalf.

  • Sharing of profit and loss:

In partnership firm all the profits and losses are shared by the partners in any ratio as agreed. If it is not given then they share it equally. According to agreement made ,the profits and losses are shared accordingly.

  • Lack of separate legal entity:

Partnership has no separate legal entity .Therefore , it cannot carry out any transaction like agreement ,contract or business activities on its own name independently. All the partners are individually and collectively responsible for the activities of the firm.

  • Joint Management:

Partnership firm can be managed jointly. All the partners have the right to manage the business .However it can also be entrusted to other partner for the management or operation of activities. The partners can become the active partners or sleeping partners on the basis of mutual agreement which is also made on the basis of knowledge ,skills and expertise, time availability and other factors.

 

Copyright:Shankar Mishra

Source: Essentials of Finance by KEC publication

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Sole Proprietorship| Finance

proprietorshipSole Proprietorship| Finance

Sole proprietorship is a form of business run by a single person and in which there is no distinction between the owner and the business. It is also called sole trading and who carries on business of sole trading is called sole trader. The main feature of such type of business is that the individual assumes full responsibility for all the risks connected with the conduct of the business.

 

Some of the main characteristics of such type of business are as follows:

  • Single Ownership:

In Sole proprietorship only one person owns the whole business and the business is exclusively in the hand of that person. He invests or provides the entire capital either from his private resources or by borrowings.

  • One-man management and control:

In Sole proprietorship ,the owner himself manages and makes all the business decisions. He formulates plans and control business according to his desire and capability.

  • Unlimited Liability:

In Sole proprietorship there is the disadvantage of unlimited liability.He/She is personally liable for business debts. His/Her individual property can be used to pay liabilities.Hence,creditors are entitled to have claim even on his private property.

  • No sharing of profit and loss:

The proprietor has the sole right on the profit of the business and if there is loss he has to suffer alone. The sole trader takes all the risks and, bears all losses and receives all profits which makes owner to work hard.

  • No secrete entity:

In Sole proprietorship the proprietor and business are not separate entities legally. Loss in business is his loss and liabilities of the business are its liabilities. Hence, law makes no distinction between the proprietor and business. All the activities are done in the name of the owner. He has individual accountability.

  • Limited Operations:

Sole proprietorship Concern has limited resources and managerial skills. It is confined to local areas. The operations are limited by capital, management skill and time of owner. Hence, it has generally a limited area of operations.

  • Freedom:

A sole trader can start any legal business according to his choice and means. He can start and close the business at any time without any formalities. He can easily expand, change or reduce his business. There is no restriction on it. However, he cannot  start any business on which some legal restrictions are imposed.

  • Secrecy:

It is very easy to maintain secrecy in sole trading. The owner himself makes all the decisions. He is not required to publish the accounts. He keeps all the business secrets to himself. Secrecy helps sole trader to face competition.

  • Personal relation:

A sole trader has always direct relations with his customers. He is able to attend to every aspects and attention are established under this form of organization.eg. doctor’s clinic,retailer,etc.

  • Lack of stability:

The life of sole trader business depends upon the life of the sole trader.Sole trading concern lacks stability.The business ends when the owner closes the business,dies or becomes insolvent.

  • Few Legal Formalities:

Sole trading concern is subject to few legal formalities. It is easy to start. But it must obey the laws.It is subject to minimum government regulations .The legal formalities are very few in comparision to others.

 

Copyright : Shankar Mishra

Source: (Essentials Of Finance by KEC Publication)

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Evolution Of Tecchnical Communication

tecjEvolution Of Tecchnical Communication

Technical Communication have been evolved in the West to ancient Greece and Rome as well as to Sumaria, and ancient Egypt.Technical communication was firstly handed orally which contained descriptions of scientific and astronomical observations.During the Renaissance period(1400-1600 AD) ,Copernicus, Geoffrey Chaucer ,Leonardo da Vinci and Newtopn wrote technical details and drawings on the use and operations of their various details and drawings on the use and operation of their various inventions.Traditionally technical writing began in professions such as engineering and construction.

Samuel Chandler Earle is known as father of Technical Communication as he wrote the book “The Theory and Practice of Technical Writing(1911)“.Technical Communication gained momentum  in modern days since first world war (1914-1918) because the western governments spent large amounts of money to write manuals and instructions on the use of weapons and defense products.Following the war,large telecom and car manufacturers and other companies created technical communication departmentswithin their organizations.The first computer-related technical manual appeared in 1949. It was written by Joseph D. Chapline. A year later,he also wrote Technical Writing,a brief pamphlet.In 1953, as a sign of field becoming more mature  technical communicators in the US came together to form professional Associations.

Technical Communication gained further pace with the growth and expansions of industries, particularly electronics and computers,as various legislations made it compulsory for organizations to produce certain technical documents as part of ensuring  standards to meet public obligations.Today the field has expanded and technical communication  is used in an edge in hardware,software and e-commerce. Experts have estimatedthat India has possibly the largest number of technical writers outside North America.

In ,Nepal due to the steady growth of technology,companies ,the proliferation of websites,the expansion of telecommunication companies,the gradual consolidation of the private sector and non-government  Organizations(NGOs) ,and above all ,modernization of various professions have widened the scope for technical communication.Since the country like Nepal is semi-literate, multi-lingual country,the need to explain technical information ,or to translate them in local dialects cannot be emphasized enough.

We cannot note that historically technical communication was not entirely non-existent in our culture.Examples or traces of technical communication practices  can be gleaned from scriptures ,oral traditions and more recently from social histories.Ayurved,the medical treatise,from more than 5000 years ago,is full of instructional technical information  on healing practices.Manusmriti, the Law of Manu ,looks equally technical,so do many other ancient scriptures.During our golden age,Arniko ,the master constructor must have written or at least sketched out some technical documents on buildingpagodas and chaityas. In  villages across the countries,lekhandas ,for many generations, helped crack legalese for the masses .Jyotishis,the astrologers,assumed the role of custodians of obscure technical scrolls.Vaidhyas,the traditional healers too have maintained a form of health prescription.One example of non-technical literature that attempts some technical communication comes from a generation ago.Shikar Nath Subedi’s Shikharnath Bhasya,written in a narrative folk verse is popular among many rural households.

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Monogamy | Advantages Of Monogamy | Sociology

monogamy Monogamy | Advantages Of Monogamy | Sociology

Monogamy is a form of marriage in which one man marries one woman.It is the most widespresd and civilized form of marriage. Aristotle has recommended only monogamous marriage.

A believer of monogamy essentially expects his/her partner to love with him/her and cooperate with him/her to make a life.He/she also expects to be the only one that his/her partner has kids with.This in turn implies that the partner should not be sexually involved with anyone outside the relationship.

Advantages of monogamy

1)Universally Practicable:

Monogamy gives one –to-one ratio so can provide marietal opportunity and satisfaction to all individuals.This form of marriage is universally practicable in different countries.

2)Economically better suited:

No man having ordinary income can think of practicing polyandry as he has very low income .So, monogamy can adjust itself with poverty.

For e.g: Even though Koran permits a Muslim to have four wives at a time but no ordinary Muslim can think of marrying four wives.

3)Promotes better Understanding between husband and Wife:

Monogamy produces highest type of love and satisfaction between husband and wife. It contributes to family peace ,solidarity and happiness.

For e.g.Vatsayana an authority on “Kama Sutra” remarked , “At best a man can only please one women physically , mentally and spiritually .Therefore ,a man who enters into marriage relations with more than one women, voluntarily courts unhappiness and misery”.

4)Contributes to Stable family and sex life:

Monogamy is more stable and long-lasting and is free from conflicts that are commonly found in polyandrous and polygynous families. It does not give opportunity for having extra-marietal sex relationships because sex relations are more strictly prohibited.

5)Helps to better Socialisation:

Since, husband and wives have better understanding , they can give greater attention to the socialisation of their children. Children are well looked after and the parents can give special attention to them.

 


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Career in Finance | Finance

career

Career in Finance | Finance

Finance refers to the activities involved in acquisition,management,allocation ,and effective utilization  of the fund.In other words,the process,practices and problems related to the financial aspect of the business organization is the subject matter of finance.Finance literally means money or wealth.It is such a vital component without which a business cannot operate smoothly.Hence it is often called life blood of business system.As human being cannot live without blood,the existance and the survival of a business without sufficient finance is unimaginative.So,it is regarded as the key element for any kind of business whether it is financial or non-financial,public or private ,large or small, profit seeking or not-for-profit.The basic areas of finance are Financial Institutions and Market,Investments and Financial Management.

A career in finance is not about money but it is close to it. The finance industry is multifaceted ,offering a variety of position catering to a number of skills and interest.

  • Commercial Banking:

Commercial banks from large entities to local institution offer a range of financial institution and services from checking and saving, etc. Career option available in this sector include bank teller, loan officer, operation and branch manager.

  • Investment Banking:

Some of the most glamorous and intense financial careers are job in investment banking. It deals with facilitating the insurance of corporate securities and making these security available for investor to purchase to both corporate and wealthy  investor.

  • Hedge funds:

Hedge funds are largely unregulated private investment fund whose manager can buy or sell a wide array of assets and financial product. Hedge fund job includes Financial analyst , Trader, Regulatory compliance officer, Quantitative analyst.

  • Financial Planner :

Financial planner help individual to develop plan that will insure their present and future financial stability. They review clients financial goal and generate an appropriate plan for saving and investing that fits the clients’ individual needs.

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Functions of Financial Management | Finance

financeFunctions of Financial Management| Finance

Financial is oftenly  called  business finance and corporate finance. The primary function of financial management is to obtain funds for business and making profitable use of that fund. In today’s world, financial management is not only the acquisition of funds but also concerns in other areas and plays an important role in collection , management ,utilization of funds.

Function of financial management can be divided into two categories:

  • Executive Finance Functions
  • Routine/Clerical/Incidental finance functions

1)Executive Finance Functions:

The finance manager takes important financial  decisions by his experience,expertise,capability and qualifications.The decision taken will have long term financial implications in the present as well as future of the firm.Some of the important executive functions of financial management are as follows:

1.Investment Decision/Capital Budgeting Decision:

This involves the decision of allocation of capital or commitment of fund to long term asset which would yield benefits in the future.One of its main task is measuring the prospective profitability of new investment.The investment decision determines the total amount of assets held by the firm,the composition of these assets ,and the business risk complexion of the firm as perceived by the supplier of capital.The essence of investment decision is that return from the investment would exceed the firms required rate of return on capital.

2.Financing Decision:

This is the second important function to be performed by financial manager.He/She must decide when,where and how to acquire funds to meet the firm’s investment needs.The firm must maintain an optimal mix of equity and debt capital,also known as capital structure. The firm’s capital structure is said to be optimum when market value of shares is maximized.

3.Dividend Decision:

The financial manager should make a sound dividend policy that determines whether the firm should distribute dividend or not. If the firm should distribute dividend , then how much should be distributed. Since, the optimal dividend policy maximizes the value of the firm,it is one of the important aspects of decision making.

4.Liquidity Decision:

Liquidity is defined as the ability of a firm to make its short term obligations. The management of current assets affects the liquidity of the firm. Hence, current assets should be managed  efficiently for safeguarding the firm against the danger of illiquidity and insolvency.

There is always conflict between profitability and liquidity while managing current assets. If a firm does invest sufficient funds in current assets ,it may become illiquid whereas it would lose profitability as idle current assets would not earn anything. Therefore, the finance manager should estimate the firm’s needs for current assets and make sure that funds would be made available when needed.

5.Financial Forecasting:

Financial Forecasting includes the estimation of financial requirement and development of finance structure .The finance manager should ensure adequate availability of cash for the smooth operation of the firm. Therefore, forecasting should also be made regarding the technical changes ,situation of capital market ,funds necessary for investment ,returns from proposed investment projects ,and the demand for the firm’s product.

6.Analysis and appraisal of financial performance:

The financial manager should perform various financial analysis in order to appraise the finance performance of the business such as ratio analysis,funds flow analysis ,break-even analysis ,trend analysis,etc.

7.Advising to the top level Management:

The another important function of finance manager is to advise the top level management about the financial position of the firm.He should provide advice on some crucial financial problems by giving the comparative study of different financial alternatives.

8.Procurement of fund:

The finance manager should try to find out the sources of fund and procure them.He should decide how much fund should be raise d from different sources through detailed financial planning .

9.Allocation of fund to All parts of Organization :

It includes the proper allocation of funds to the different departments in accordance with their need.

10.Pricing:

Pricing is a crucial part of decision making .If the goods and services were priced lower priced ,then the firm would find difficulty in covering its operating cost. The firm would lose competitive strength if priced excessively. Hence, the finance manager should evaluate the impact of pricing policy on profitability.This helps to determine the price of the firm’s product in a reasonable way.

11.Control:

The finance manager should have the centralized control over the firm’s activities .For this , he should interact with other executives. This ensures the efficient  operation of the firm.

 

2)Routine Functions:

This includes those functions which are performed by lower-level employee.These functions help management to take important decisions.These functions include:

  • Supervision of cash flows and protection of cash balance .
  • Protection and safety of financial documents
  • Recording,keeping and reporting.
  • Preservation of accounting document.
  • Preparing financial statements.
  • Management of credit.
  • Disbursement and collectionof credit .
  • Making incentive schemes such as insurance and pension.
  • Management of payroll,tax-related matters,inventory,fixed assets ,computer operators,etc.

 

 

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Difference between MEC and MEI| Macroeconomics

MEC

MEC and MEI

Difference between Marginal Efficiency of Capital (MEC) and Marginal Efficiency of Investment( MEI)| Macroeconomics

Marginal Efficiency of Capital(MEC)  is the rate of discount which makes the discounted present value of expected income stream equal to the cost of capital.MEC was first introduced by J.M Keynes in 1936.According to him it is an important determinant of autonomous investment.

Marginal Efficiency of Investment(MEI) is the expected rate of return on investment as additional units of investment are made under specified  conditions and over a atated period of time.When cost of borrowing is high ,businesses are less motivated to borrow money and make investment on different projects because high cost of borrowing reduces profit margin of the business firms;business firms always cannot raise the price of their product and services to increase profit.

The concepts of marginal efficiency of capital(MEC) and marginal efficiency of investment (MEI) seem similar .There are however some basic differences between MEC and MEI.Some of the basic differences between MEC and MEI are as follows:

Marginal Efficency of Capital(MEC) Marginal Efficiency of Investment(MEI)
1)MEC is based on a given supply price for capital. 1)MEI is based on the induced change in the price due to change in the demand for capital.
2)MEC represents the rate of return on all successive units of capital without regard to existing capital. 2)MEI shows the rate of return on just those units of capital over and above the existing capital stock.
3)In MEC the capital stock is taken on the horizontal axis of diagram. 3)In MEI the amount of investment is taken on the horizontal axis of diagram.
4)The MEC is a “stock” concept. 4)The MEI is a “flow” concept.
5)The MEC determines the optimum capital stock in an economy at each level of interest rate . 5)The MEI determines the net investment of the economy at each interest rate,given the capital stock .

 

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