Category: Economics 2707

The Internal Revenue Service is tasked with collecting taxes in the United States and monitors transactions made by those in real and cryptocurrency businesses. The IRS requires crypto to provide taxpayer information for taxpayers with over $20000 in proceeds or more than 200 transactions in any given year. The provision of the taxpayer information eases the process of collecting tax because the IRS can calculate and determine the amount of tax a taxpayer is supposed to pay. However, taxpayers with less than $20000 in proceeds and less than 200 transactions are exempted from providing their transaction information. Despite being exempted from availing their transaction information, taxpayers with less than $20000 in proceeds and less than 200 transactions should pay taxes depending on the percentage rations given by the Internal Revenue Service.

In most cases, taxpayers with less than $20000 in proceeds and less than 200 transactions per year would fall under the short-term category and would, therefore, be subject to short-term capital gains rates of taxation. The taxpayers with less than $20000 in proceeds and less than 200 transactions must keep clear records of their transactions since the crypto does not send their reports to IRS. They are required to calculate their tax rates and indicate the losses or gains incurred on Form 8949. The Internal Revenue Service requires that any asset sold for a profit should be subjected to taxation. Since most taxpayers with less than $20000 in proceeds and less than 200 transactions also realize profits in their cryptocurrency transactions, they should pay taxes like the other taxpayers with more than $20000 in proceeds and more than 200 transactions.

While Sweden and Italy share multiple characteristics, such as political democracy, relative territorial proximity, and similar traits, the political economies contrast on various levels. It can be attributed to the fact that Sweden is an example of classic corporatism. Thus, different corporate groups form associations that can then advocate and collectively achieve professional, legislative, and social goals (Bale, 2017). Moreover, as the initiatives are supported by the government, the divisions have power over major economic processes within the country. Coordinated strikes, protests, and demands of change to facilitate better economic conditions and hinder corruption. On the other hand, the Italian system is based on resilient clientelism, implying individual and voluntary advocacy and effort towards change. Such a framework is accompanied by patterns of corruption as a lack of collective force that can drive reforms allows employers to wither impact the political agenda or ignore it for their benefit.

The two cases help prove the existence of a core and a periphery. The core, hence, Sweden is a country where the political economy is transparent and socially oriented. Italy, on the other hand, as a representative of Southern Europe, is illustrated through a lack of opportunities for a collective force to majorly influence certain national processes. The two countries are examples of differences in approaches to power, and the system that correlates with more beneficial results is the one in which individuals are able to form a collective alliance.

As corporations are constantly developing and a lack of solid unions may be maximized through national efforts, Italys political economy may suffer in the future. Moreover, since patterns of corruption correlate with the existing resilient clientelism, individual power may become redundant. Hence, workers may be harmed through corporate ideas such as reducing costs and increasing profit, which can lead to major downfalls from a social and economic perspective.

References

Bale, T. (2017). European Politics: A Comparative Introduction. Bloomsbury Publishing.

Article Summary

Bloombergs article Big Stock-Picking Hedge Funds Suffer Brutal Reversal in 2022s Market Tumult comments on the unusual trends in the 2022 stock market. I believe this information is important because it provides a nuanced and comprehensive outlook into the world of modern money and how easily it can be disturbed.

The largest hedge funds that sprang from Julian Robertsons Tiger Management have consistently outperformed the market. However, in 2022, they are losing money on both of their favorite trades: unicorns and technology giants. The so-called Tiger cubs, Chase Coleman, Philippe Laffont, and Andreas Halvorsen, all rode long positions in the IT sector as values rose, only to suffer as opinion turned amid tumultuous markets.

According to a letter to clients sent last week, Tiger Globals managers adjusted valuations down for the funds private investments to account for pressure on their public-market peers. ByteDance, Stripe, Checkout, and Databricks are among the private companies owned by the fund. Its unclear what the write-downs signify for Tiger Globals venture division, which had $65 billion in assets at the end of the year. Karthik Sarmas SRS Investment Management was one Tiger offshoot that defied the trend. The $8 billion company concluded the quarter with a 9.6% gain, thanks in part to a big investment on Avis Budget Group Inc (Parmar and Burton). Despite the volatile atmosphere, Sarma spent five years with Tiger Global before launching his own firm.

Some investors believe the mega funds missed the market rotation caused by inflation fears and a European conflict because of their size, which hindered them from being flexible. As a result, many people found themselves on the wrong side of a variety of deals. This contradiction once again underlines the relevancy of this article to the present day, where among the war happening in Europe and the sharp rise in inflation, it is essential for people to get a basic understanding of the stock market.

Work Cited

Parmar, Hema, and Burton, Katherine. Big Stock-Picking Hedge Funds Suffer Brutal Reversal In 2022S Market Tumult. Bloomberg.Com, Web.

Introduction

Federal Reserve, otherwise known as the Federal Reserve System, is the United States central bank. It was created under Federal Reserve Act signed by President Woodrow Wilson in 1913. The act dictates its roles and responsibilities in the financial sector. The Federal Reserve is headed by a Board of Governors stationed in Washington DC, appointed by the president, and approved by the Senate. The Board is directly answerable to Congress, but it does not get its financing from the congressional appropriation. Despite Congresss involvement in setting goals for monetary policy, its mandate of the Board to make decisions on how they are achieved without seeking approval from the legislature or the executive. The Federal Reserve bank is responsible for conducting monetary policy, supervising and regulating financial institutions and activities, promoting financial system stability, fostering payment and settlement system safety and efficiency, and promoting consumer protection and community development.

Conducting Monetary Policy

Federal Reserve plays a critical role in the United States monetary policy by ensuring maximum employment and stability of prices across the United States. These policies impact the dollar exchange rate, stock prices, and interest rates, among other financial asset prices. The changes in these prices influence business and house decisions and thus affect investment, employment, spending, and production. The Board of Governors and the heads of the 12 Federal Reserve banks, collectively referred to as Federal Open Market Committee (FOMC), make monetary policies. They base their decisions on Gross Domestic Product (GDP), Consumer Price Index, inflation (CPI), global political stability, and lifting or imposing trade tariffs (Federal Reserve, 2021). To regulate the impact of these factors, the Federal Reserve responds by imposing policies to increase or reduce the flow of money in the economy.

During inflation, the Federal Reserve raises interest to help curb the adverse effects it might cause to the economy. This causes the prices of basic commodities to go up, thus making it unaffordable for the less privileged in society to purchase even food. The intervention positively impacts the economy but subjects other people in the community to suffering. According to Exodus 22:25, it is ungodly to charge high-interest rates. It is against imposing interest rates on a poor borrower struggling to repay the loaned amount. The Federal Reserve, on the other hand, should consider different ways of regulating inflation instead imposing high interests even on the poor.

Supervising and Regulating Financial Institutions and Activities

The Federal Reserve is mandated to monitor and regulate financial institutions and ensure that they operate within the provided principles. Moreover, it is responsible for identifying and evaluating potential risks to the financial system and the economy. The Federal Reserve issues guidelines regarding financial institutions acquisition, formation, and operations. It then follows up to monitor and ensure that institutions follow the guidelines to the latter. Some financial entities the Federal oversees are bank holding companies, state member banks, domestic financial holding companies, designated financial market utilities, foreign banking organizations operating in the U.S., and savings and holding companies. It supervises these institutions through examination and inspections, which involve evaluating risk management systems, compliance with applicable laws and regulations, and assessing the financial condition (Federal Reserve, 2021). In addition, it uses the risk-focused approach for consolidated supervision for companies with subsidiaries; it assesses the resources, activities, organization structure, and other deficiencies raising concerns to the parent company.

On the other hand, the Federal Reserve regulates financial institutions by issuing restrictive, prescriptive, or permissive guidance to supervised financial entities and ensuring they comply with these regulations. In the financial system, guidelines must be up to date to effectively respond to conditions and laws in the prevailing market to enhance safety in the supervised institutions (Federal Reserve, 2021). Federal Reserve must ensure financial institutions have adequate capital and proper planning, issue supervisory statements and guidelines, and oversight the banking system structure.

Promoting Financial System Stability

With the drastically evolving global financial systems, there is a need for Federal Reserve to promote financial stability in the United States. This will ensure financial institutions and services providers have demands they can adequately meet. While fostering financial stability, the Federal system effectively links savers and lenders with borrowers and spenders (Bernanke, 2017). Federal Reserve keeps the institutions and market structures resilient by monitoring risks such as asset valuation and risk appetite, funding risk, leverage in the financial institution, and borrowing by businesses and households in the financial system. In addition, it assesses the causes, effects, and remedies for economic instability in the country.

Fostering Payment and Settlement System Safety and Efficiency

The Federal Reserve facilitates secure financial transactions of the U.S. dollar across the country and even the global markets. It issues paper currency, processes credit and debit card transfers, collects debited checks and returns unpaid ones to the source banks (Automated Clearing House), and makes wholesale payments such as Fedwire Funds and Securities. In addition, the Federal Reserve regulates and supervises the payment systems, provides banking system liquidity, and explores and implements payment services improvement (Federal Reserve, 2021). It is a pillar holding the United States financial system and enabling swift local and international transactions.

Promoting Consumer Protection and Community Development

The Federal Reserves responsibility is to ensure consumer protection and community development through supervision and research on the impacts of policies and financial services in the market. It ensures financial institutions are compliant with the relevant consumer protection laws and fulfill community reinvestment laws and requirements (Federal Reserve, 2021). In addition, the Federal Reserve formulates and reviews regulations that enforce consumer protection, conducts rigorous analysis to understand emerging opportunities and risks, and engages stakeholders in enhancing effective consumer protection and community development.

It enforces consumer protection rules through written agreements with financial institutions, issuance of cease-and-desist orders, and ordering replacements for those affected by violations of particular regulations. Moreover, use customer feedback and complaints to identify and probe for a possible violation of consumer rights. It follows the issue and ensures it is addressed comprehensively, and the concerned financial institution initiates necessary reforms (Federal Reserve, 2021). The complaint can also be documented and used to inform policy formulation at a future date.

Conclusion

The Federal Reserve is responsible for conducting monetary policy to ensure maximum employment and stability of prices across the borders of the United States, even though some of the policies are overstepping biblical principles. Supervising and regulating financial institutions and activities is mandated to ensure they operate within the guidelines. Federal Reserve is the government agency that upholds the countrys financial stability. In addition, it facilitates payment and settlement system safety and efficiency locally and internationally, as well as promotes consumer protection and community development by ensuring customers rights are honored.

References

Bernanke, B. S. (2017). Federal Reserve Policy in an International Context. IMF Economic Review, 65(1), 132.

Federal Reserve. (2021). Board of Governors of the Federal Reserve System. Federal Reserve Board  The Fed Explained.

Introduction

Immigrant recruitment is critical to Canadas current and future economy. Newcomers fill labor shortages in the country, start or expand enterprises, and invest in the local economy. Employees and employers are both economic immigrants that contribute to the prosperity of Canada. When they immigrate to the state, the majority of them become permanent residents. Talent, creativity, family members, and financial capital are all brought to Canada by economic immigration. They also contribute to the development of the countrys culture, legacy, and possibilities. These immigrants benefit from technological advancement, productivity, and economic growth. This paper aims to analyze the history of economic migration in Canada by applying different economic theories and concepts.

Discussion

Over the previous 150 years, the number of landed immigrants in Canada has fluctuated dramatically. Some of these shifts can be traced back to changes in immigration policy, while others can be attributed to the state of the Canadian economy or global events involving the flow of migrants and refugees. For example, between 6,300 and 133,000 immigrants were admitted to Canada per year in the late 1800s (Fleras, 2018). In the early 1900s, when Canada was pushing the settlement of Western Canada, record numbers of immigrants were accepted (Fleras, 2018). In 1913, more than 400,000 immigrants arrived in the country, which was the biggest amount ever recorded (Fleras, 2018). During the period between 1870 to 1913, the West was settled, high levels of investment were made, rapid economic growth was achieved, and a national economy was established. Immigration policy was part of a broader set of national policies during these years, and indeed until 1930 (Fleras, 2018). Three transcontinental railways were completed, high levels of protection against the entry of secondary manufactured goods were imposed, and a land program was implemented to encourage people to live in the West.

The above-mentioned policies were intended to unite Canada as a whole, with a strong eastern industrial sector selling its wares to a growing western resource industry. Immigration promotion was a key component of the growth agenda. The government was forced to replace the previous Act of 1869 with a new Act in 1910 as a result of massive immigration inflows from the United States and other countries beginning in 1896 (Fleras, 2018). This Act incorporated a fundamental strategy of focusing on a prospective immigrants country of origin, which remained unchanged until 1962 when a non-discriminatory set of laws was developed. It is seen that making economic policies aligned with national policies is crucial in providing favorable conditions for economic migration.

After World War II, people uprooted by war or political turmoil, as well as the weakening of European economies, fueled much of the postwar immigration to Canada. Canadas postwar immigration policies, on the other hand, were a significant factor. These policies influenced the number of new arrivals, the sorts of immigrants, and the nation of origin of new entrants because they stated who would be accepted and under what terms. Yet, these policies had obstacles related to national origin as some people could obtain a permit to work while others could not; thus, causing troubles to economic immigration.

New laws, however, eliminated national origins as a factor for admittance in 1962. Further regulations adopted in 1967 maintained this idea and replaced it with a point system based on an applicants age, education, language abilities, and economic criteria. Immigrating to Canada became significantly easier for people born outside of Europe and the United States as a result of these legislative changes (Fleras, 2018). The 1967 legislation also confirmed immigrants ability to sponsor relatives for entry into Canada, which had been extended since the 1950s (Fleras, 2018). Family-based immigration had always coexisted with economic immigration, but it was now clearly defined for new entrants. The makeup of the immigrant population was also reshaped by an immigration strategy based on concepts of family reunification and labor market contribution. It meant that persons from any country may be admitted if they met the immigration regulations requirements.

An important point to address in the analysis of economic immigration is entrepreneurship as immigrant open their businesses after a long time in the country. According to Schumpeter, entrepreneurship is linked to the process of creative destruction, in which an external innovation disrupts the cyclical systems state (Bodro~i and Adler, 2018). The breakdown of the equilibrium situation and the formation of new conditions are implied by the innovative process of entrepreneurial activity in this paradigm. The entrepreneur is a figure whose innovative action disrupts established order and creates unrest. Therefore, it is vital to regulate the role of entrepreneurs and manage their activities on a national level as they drive the economy.

Conclusion

Overall, immigration was and continues to be a driver of the Canadian economy. Those who see immigration primarily as a short-term labor market policy instrument and those who believe in its long-term benefits have fought each other throughout Canadas policy history. For the former, immigration can give specific benefits in the form of workers who are specifically targeted to fill labor market shortages. Immigration is a long-term economic growth engine for the latter.

Reference

Bodro~i, Z., & Adler, P. S. (2018). The evolution of management models: A neo-Schumpeterian theory. Administrative Science Quarterly, 63(1), 85-129.

Fleras, A. (2018). Canadian exceptionalism: From a society of immigrants to an immigration society. In Immigration, Racial and Ethnic Studies in 150 Years of Canada (pp. 301-324). Brill.

The Demand Concept

Demand is a common economic subject and principle that refers to the desire, willingness, and ability to purchase and pay the price for a specific good or/and service. In most cases, the demand for goods and services decreases as the price increases. Similarly, when the price decreases, the demand increases. This economic principle applies to assume all other factors apart from price are invariable or held constant. Market demand refers to the total quantity demand of a given good in a market across all consumers (Fukase & Martin, 2020). On the other hand, aggregate demand is the cumulative demand for all services and goods in a particular economy.

Application of Demand in a Car Industry

Toyota Company and Ford are in high competition to win the United States of America car market. The two companies spend substantial resources identifying and determining the demand for specific brands in the U.S. It is also upon the giant companies to establish the number of units they are likely to sell, given the prevailing prices and economic conditions (Fukase & Martin, 2020). This is critical because incorrect estimation results in losses when overestimated, or customers money is left unspent in case of underestimation. Customers demand fuels the economy, and its absence implies little or no production.

For instance, though the largest market for Ford in the United States with 1.8 million vehicles in wholesale dealerships in 2020, Toyota overtook it by delivering a whopping 1.9 million units to customers in the year 2021 despite the ravaging COVID-19 pandemic that adversely affected many markets across the world (Shigeta & Hosseini, 2021). The change in the units sold by the automotive dealers implies a shift in demand and probably in price.

Relationship between Demand and Supply Components

Demand and supply are closely related, and their interactions determine the equilibrium price and quantity. The equilibrium point is where the demand curve of a specific good or service meets or crosses the supply curve (Islam et al., 2021). The point of intersection between the two curves gives the equilibrium quantity and price. The equilibrium point is important because consumers want to pay the lowest price possible for the goods and services they demand. In contrast, suppliers want to charge the maximum potential to maximize their profits. Charging consumers too little increases demand, but the price may not cover the suppliers cost and give room for profit. Likewise, if the supplier charges too much, the demanded quantity declines, and thus the seller makes little sales to earn enough profit. Therefore, the only alternative is to balance the demand and supply.

Factors that Determine Demand

Taste and preferences of the consumer, in this case, it is important to realize that individuals taste for goods varies depending on the manufacturer, ingredients, color, and many other variables. When the taste and preference of a particular good or service are more significant than others, its demand tends to increase and the demand curve shifts upwards. For example, COVID-19 has been associated with non-communicable diseases (NCDs) like high blood pressure, diabetes, heart diseases, and upper respiratory illnesses. Since NCDs are associated with obesity, overweight, and lack of exercise, many Americans turn to high-calorie foods such as bread, red meat, soy products, avocados, dairy foods, chickpeas, sweet potatoes, whole grains (brown rice), and nuts (macadamia). Therefore, the demand for the above foods has gone down due to the taste and preference of many citizens.

Incomes of the people- in this case, the lower the peoples level of income, the greater the demand for products. An implication that arises in income leads to an increase in demand and an upward shift of the demand curve and vice versa is true. A rise in income constantly enhances the purchasing power of consumers. Hence, income determines the affordability of goods and services. These rationales make an increase or decline in income positively or negatively affect the goods or services income. In towns like New York and Washington, most residents are middle- to high-income.

The demands for banking services in these towns are higher than in Las Vegas and Fresno, California. Society composition and wealth determine demand levels. Changes in the prices of the related goods- demand for certain goods is affected by the prices of other related goods. Goods that change in demand due to the prices of others are related by either being complements or substitutes. For example, butter, peanut, and jam are mostly purchased together with bread. Therefore, butter, peanut, and jam are complementary goods to bread. An increase in the price of bread leads to low demand for the good and consequently reduced demand for butter, peanut, and jam. On the other hand, when prices for a loaf of bread go down, the demand increases, leading to high demand for its complementary goods.

On the contrary, products or services used alternatively but to serve a similar purpose are called substitute goods or services. Substitute goods include margarine and butter, tea and coffee, Coke and Pepsi, and Colgate and Crest. When the price of a substitute good increases, its demand decreases while the demand of the substitute good increases, assuming that its price is constant. For instance, if the price of a 500 ml Coke increases, its demand declines while the demand for Pepsi shoots and vice versa.

The populations of consumers in the target market- present and prospective buyers or consumers determine the market demand at every given price. As the number of buyers of a particular commodity increase, its market demand goes up and vice versa. When a supplier puts effort into finding a new market or expanding the existing clientele for their services, the demand for that particular service increases. Another significant factor in increasing the number of consumers is the growing population. The population contributes to economic growth through increased demand and supply of skills and expertise.

Change in the propensity to consume- market players propensity to consume and save affects demand positively and adversely, respectively. When the propensity to consume rises, consumers spend a considerable proportion of their income to buy a particular good or service, expecting its demand to increase. On the contrary, if consumption propensity falls, the consumers spend their income sparingly, saving more, expecting that the demand will fall. Expectations of consumers concerning future prices- if, for specific reasons, consumers speculate that prices for particularly good or service will fall, they tend to purchase low quantities of that good or service in the present so that they pay less in the future when demand is low. On the other hand, when buyers expect, due to unavoidable circumstances, the prices of a commodity to rise, they tend to buy greater quantities of the good in the present when the price is low so that they dont pay higher prices for that particular good.

Income distribution- equal distribution of income leads to a relatively high propensity of the society to consume and, consequently, high demand for goods and services. With an unequal income distribution, consumers propensity to consume is relatively low. Thus, demand decreases. The factor is further explained by the low propensity to consume the rich compared to the poor. For example, western countries like the U.S.A, Japan, Germany, The U.K., and others have close to even distribution. After discovering Covid-19 vaccines such as Johnson and Johnson, Moderna, AstraZeneca, and Pfizer, the uptake of Covid19 vaccination has hit over 80% in most countries, implying greater demand. On the other hand, in African countries and some Asian nations, the income distribution is unequal, and thus, the demand is low.

Demand Elasticity

The elasticity of demand is the responsiveness of a goods demand compared to other economic factors changes or adjustments (Keat & Young, 2014). Price is a common economic factor varied to determine demand elasticity, but income can also be used.

Types of Elasticity of Demand

There are three common types of demand elasticity: price elasticity of demand, cross-price elasticity, and income elasticity of demand. Price elasticity of demand- this kind of elasticity determines the effect of price change on the quantity demanded. It is generally calculated as the percentage change in demanded quantity over the percentage change in the products price. Due to the law of demand, elasticity commonly results in a negative elasticity unless the good is given.

When the quantity demanded of a good does not respond to the price changes, the commodity is said to have a perfectly inelastic demand. On the other hand, if the percentage change in price is equivalent to the percentage change in quantity demanded, then the demand of that good is said to be unit elastic (Díaz and Medlock, 2021). Examples of goods whose demand is price elastic include cars, furniture, and housing. Besides, goods whose demand is inelastic are beef, salt, prescription drugs, textbooks, and gasoline. Factors affecting price elasticity of demand are:

1. Nature of the good; is it a luxury or a necessity.
2. Availability or affordability of close substitutes.
3. Time elapsed since the price changed.
4. Income proportion spent on the good.

The cross-price elasticity of demand measures the sensitivity of demand of one good compared to the change in the price of another commodity. When the Cross-price elasticity of demand between two commodities is negative, then the goods are a compliment, and when the elasticity is positive, the goods are substitutes (Yadav et al., 2021). For example, if the price of margarine rises, the demand for butter rises, inferring to substitute goods. When the price of bread rises, the demand for butter falls because the goods are complementary.

Income elasticity of demand  this elasticity refers to the responsiveness of the quantity demanded of a particular good about change in the consumers income (Fernandez, 2018). Income elasticity of demand is computed as the percentage change in the quantity demanded divided by the percentage change in the consumers income. Whenever the income elasticity of demand is positive, the commodity is considered good; denoting quantity demanded increases as income increases and vice versa. On the other hand, if the income elasticity of demand is negative, the commodity is considered inferior good; this implies that the quantity demanded decreases as the income increases. Inferior goods are associated with the poor.

Application of Elasticity Regarding the current Trend of the Covid-19 Pandemic and Waves

The cost of testing for Covid-19 in 2020 in the United States of America was relatively high, ranging from $52 to $478 per individual. In 2021, Covid-19 testing dropped to as low as $10 and was free in government health facilities, mainly when one exhibits symptoms associated with the disease (Keat & Young, 2014). The number of people who have undergone testing in 2021 tripled for every monthly total. It is related to a reduction in price for the service. Therefore, the price elasticity of demand for Covid-19 testing was negative and low prices resulted in increased demand.

The prices of Moderna and Pfizer have significantly increased due to their readiness to combat different Covid-19 variants. However, with the same capacity to fight emerging variants, AstraZeneca is cheaper, and its price has remained steady over time. As a result of cross-price elasticity, many countries, especially the low and middle-income countries, are going for AstraZeneca vaccines for their population. On the same breadth, many economies worldwide are recovering and thus increasing their income; for this reason, their governments are buying large quantities of vaccines to protect their population from the adverse effects of Covid-19.

References

Díaz, A. O., & Medlock, K. B. (2021). Price elasticity of demand for fuels by income level in Mexican households. Energy Policy, 151, 112132.

Fernandez, V. (2018). Price and income elasticity of demand for mineral commodities. Resources Policy, 59, 160-183.

Fukase, E., & Martin, W. (2020). Economic growth, convergence, and world food demand and supply. World Development, 132, 104954.

Keat, P., & Young, P. (2014). Managerial economics. Boston, MA: Pearson. ISBN: 978-0133020267

Shigeta, N., & Hosseini, S. E. (2021). Sustainable development of the automobile industry in the united states, Europe, and Japan focuses on the vehicles power sources. Energies, 14(1), 78.

Yadav, D., Kumari, R., Kumar, N., & Sarkar, B. (2021). Reduction of waste and carbon emission through the selection of items with cross-price elasticity of demand to form a sustainable supply chain with preservation technology. Journal of Cleaner Production, 297, 126298.

In his The False Promise of International Institutions, Mearsheimer presents a critique of institutionalism theories and the policies that ensue from them. He claims that these theories do not reflect the realities of the world and are disproved by the worlds history. According to him, the alternative, namely realism, is rejected because of its harsh notion of the inevitability of war; hence, the international institutions do not overpower the states ambitions and cannot fulfill their purposes (Mearsheimer, 1994). The first strength of this perspective is that it points out that the individuals in power often weigh more than large institutions; second, it denotes that past institutionalism attempts failed. However, the weaknesses are as follows: the world has changed since the Cold War and has become more decentralized and interconnected, so the international institutions now have power; moreover, these institutions also include military alliances that can easily access authority and enforce peace.

The counterarguments for realism theory should be evaluated as well. Pevehouse and Russett (2006) argue that international governmental organizations statistically present the ability to prevent violence and aggression between the states with the condition that the countries of these organizations are democratic. This argument seems somewhat illogical; it does not prove that all institutions are effective, only democracy-based ones. Ruggie (1982) claims that the international institutions work because of the existing free trade worldwide and its benefits that prevent the member states of an organization from breaking its convention and, for example, waging unjustified war. This counterargument has more value since mode states, in fact, try to use their advantages in the market, and their effectiveness depends on their compliance with the other countries that participate in trade. So, I can agree with Ruggie and state that the global nature of modern economics binds states into international organizations, such as SWIFT. Hence, these financial and other institutions affect trade, which is significant for the welfare of the nation. Therefore, the world relies on these institutions and regimes, and the realist paradigm cannot be considered relevant nowadays.

Bibliography

Mearsheimer, John J. 1994. The False Promise of International Institutions. International Security 19 no. 3, (Winter): 549. Web.

Pevehouse, Jon, and Bruce Russett. 2006. Democratic International Governmental Organizations Promote Peace. International Organization 60, no. 4: 9691000. Web.

Ruggie, John Gerard. 1982. International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order. International Organization 36, no. 2 (Spring): 379415. Web.

Introduction

The topic of population growth has gained traction from scholars in different disciplines. An increase in the number of people means that the economy should be large enough to sustain the housing, consumption needs, institutions, and resources such as land required for infrastructural purposes. Developed and developing economies are always thinking of new ways to sustain their populations while also keeping check on risks associated with overpopulation. Scarcity of economic resources such as land has always forced leaders to worry about the future of their economies. Scholars have taken up the task of investigating and proposing better policy frameworks that could governments in responding to concerns related to population and economic sustenance. Thomas Malthus, who lived from 1766-1836, is among the historical figures who attempted to resolve the puzzle of population growth and distribution of resources. The Malthusian theory has faced both appraise and criticism, and it is still studied in literature today. Some scholars have agreed that Malthus was wrong, but a critical view of his theory reveals that the theorist may have been wrong at the time of coining the theory, but one day he will be right.

An Overview of the Malthusian Theory

Thomas Malthusian coined and explained his theory on the relationship between population growth and economic resources in the essay titled An Essay on the Principle of Population. The essay was first published in 1798, but it was reviewed and revised in 1803 as explained by Rahman (14). Scholars have analyzed, critiqued, and raised several arguments about Malthus claims raised in the theory. In one of the quotes cited in the essay first published in 1798, Malthus claimed that human beings have a tendency to increase in an geometric ratio, while the needed resources such as food tend to increase in an arithmetic ratio (Malthus 7). This statement has been summarized and interpreted by Cooper and Walter to mean that human population increases with birth rate, while food production tend to increase at a slower rate. The fact that population increases at a higher rate means that there is a time when the population will overpower the available food resources, leading to a crisis (33). Malthus had anticipated that his predictions could happen within a short period, considering that an increase in population without a check could strain economic resources, governments, and other institutions in place. It was in Malthus point of view that nature could correct the consequences of unchecked population growth through natural factors such as war, diseases, and calamities. The theorist postulated that the possibility of the population overgrowing the natural resources was inevitable, considering the rate at which man was reproducing. Malthus foresaw a doomed future.

Malthusian theory can be visualized from a graphical point of view. The graph in figure one below is among the simplified versions that scholars have developed to explain the theory. According to Heavey and Walter, Malthus believed that an exponential increase in human population, specifically in England, could drive the graph to the point of crisis (9). The theorist believed that after the point of crisis, society could collapse and force people to revert to traditional methods without influence from industrialization. Many critics of Malthus have labeled him as a prophet of doom and a liar, bearing in mind that his predictions did not materialize. Additionally, people had hoped that industrialization and increase in population could trigger economic and social development, but Malthus was arguing on the contrary. A critical review from the point of critics reveals why the theorist may have made a mistake in coining this theory. Nevertheless, history has justified Malthus in some accounts that have been fulfilled in the past. For instance, Europe responded to overpopulation by opening doors to emigration to new lands that had been occupied. There have also been cases where the struggle for resources has seen people migrate to less populated areas throughout history.

While critics have labeled Malthus as a prophet of doom, the theorist was optimistic and provided a way out of the impending crisis that he had seen in Europe. The theorist suggested the option of positive checks and negative checks, which he believed could be used as a way out of the inevitable crisis. Malthus defined positive checks as natural calamities such as epidemics and wars. These factors can place positive checks on the population growth by increasing death rates as a result of starvation from famine. Malthus also defined preventive checks as artificial interventions aimed at controlling the population growth (Malthus 89). The theorist championed for adoption of preventive checks such as controlled fertility and restrained sex outside and within marriages. The theorist argued that where preventive measures failed, natural checks could apply directly. For instance, poor people who did not exercise controlled births could lose their children to diseases related to nutrition. People who did not take responsibility for their sexual desire risked being corrected by the natural positive factors.

The Malthusian Theory: Critical Review

Malthusian theory has attracted significant criticism compared to praise from demographers and sociologists. The theory has also been criticized by politicians and scholars from other disciplines after it has become evident that the doomsday predicted by Malthus may never materialize. While Malthusian arguments take different forms, a common point in any of the statements coined by the theorist is that an increase in human population leads to a decrease or a drop in economic resources. Scholars have proved that contrary to what Malthus had postulated, history has proved that the world economy is resilient enough to withstand population growth.

Technological advancements are among the counter-arguments that have been used against Malthusian theory. According to Heavey and Walter, Malthus was blind to the impact of the growing technology and the potential changes that technological advancements could have had on the population growth and food production (13). Instead, Malthus was pessimistic, where he believed that food production and other resources required sustaining man on the planet could continue diminishing throughout history. Throughout history, technological advancements have been key drivers to solving the problems that man has been facing. In the discussion and criticism of Malthusian theory, Cooper and Walter pointed out that technological advancements have remained key drivers in resolving any challenges that man has faced, even though it is not possible to tell when the problem is in progress (9). For instance, the industrial revolution has been cited as a key milestone in the fight against famine and poverty. During the industrial revolution, scientists came up with better ways and means of producing food which could not have been possible in the absence of technology. It is, therefore, evident that man has remained creative in coming up with strategies to solve challenges even when it does not seem possible at the moment. This counterargument has refuted the Malthusian theory.

Scholars have taken a computational approach to critic and prove that indeed, Malthus was wrong. According to Rahman, Malthus was more pessimistic with the relationship between population growth and food production (18). The theorist assumed that every child who is born comes to the world with a mouth to feed and a stomach to be filled, while ignoring that there is also a pair of hands that are used for resource production. Critics have stated that the pessimist theory of Malthus was focused on England alone, and the theorist did not consider that population increase leads to more manpower required for production. It is evident that an increase in manpower increases the production power of an economy, contrary to the pessimist approach viewed by Malthus. Additionally, neo-Malthusian theorists have proved that the world population does not double after every twenty-five years as argued by the theorist. Instead, the world population has been growing at a slower rate contrary to the Malthusian projections where he did not use any mathematical computations.

Malthus has been criticized for failing to acknowledge the role that people can play when allowed to manage or make decisions about birth control in response to economic needs at the individual level. Malthus assumed a fixed relationship between population growth and economic development, while failing to acknowledge that people can make decisions that could affect birth control and increase in food production. In an economic review of the theory by Unat, the author claimed that Malthusian had failed to take into account the fact that people could limit reproduction or only decide to give birth to a manageable number of children (145). For instance, it is now evident that many parents opt for family planning and other birth control techniques because they are more concerned about quality of education and food availed to families. Today, family planning is no longer a female issue, but men have also realized the importance of giving birth to the number of children that they can support. Globalization has opened doors for developed economies to trade with developing and underdeveloped economies and avail food to millions of people who may have starved today. Many families are no longer willing to give birth to the number of children that they cannot feed or educate. A case in point is England and Europe in general, where Malthus had anticipated a continuous population growth to the point of crisis, but the prophecy has not been fulfilled.

Applicability of Malthusian Theory

Despite the criticism faced by Malthusian, some of his concerns have been fulfilled, and could be inevitable. Proponents of the Malthusian theory have argued that people in Europe listened and took heed of Malthusian warning during his time, which prevented them from falling into the inevitable crisis. Cooper and Block explained that the Malthusian prophesies have only been postponed, but can occur in any time in future. For instance, people opted to use of contraceptives, delayed marriages, and birth control through family planning to avoid giving birth to a higher number of children that they could not control. In the absence of the Malthusian warning, Europe could have plunged into the point of economic crisis. Even though the main reason why people adopt family planning strategies has not been to avoid overpopulation, a combination of these strategies has always led to positive impacts in preventive checks that Malthus discussed in his theory. For instance, most families that adapt delayed marriages or family planning techniques are compelled by the rising costs of living.

It is important for stakeholders and governments to note that even though years have passed without fulfillment of Malthusian doomsday, the consequences of population growth and impact on economic growth and development are inevitable. Technological advancements and increase in food production and agriculture have only provided short-term results, but the long-term consequences are already taking shape. The increasing rates of global warming, outbreaks of epidemics and global pandemics, the ongoing war between Russia and Ukraine, and the rise in sea level attributed to environmental degradation are just but a few of examples that could prove Malthus right. Scientists have not discovered a better way of increasing the available land. Land is a limited resource, and any attempt to expand its availability has interfered with natural ecosystems, which has triggered human/wildlife conflicts and the rising cases of drought (Rahman 18). The consequences are already unbearable, considering the rising food prices and the increasing number of people dying of hunger and in dire need of relief food in developing economies in Africa and Asia.

Conclusion

The Malthusian theory points at the relationship between population growth and economic development. The theorist has faced criticism for postulating that the world was headed to a doomsday if positive and preventive measures were not in place to control overpopulation. Critics have condemned Malthus for taking a pessimistic approach towards humanity for assuming a fixed relationship between population and economic growth. The world has proved resilient against the Malthusian theory. Despite the criticism, one cannot ignore that most of the preventive measures in place today reflect the theorists point of view. People are more sensitive about family and birth control measures in response to rising costs of living. Positive checks are also active, and the impact is felt in every place across the globe in terms of global warning. Malthus may not have been right at the time of coining the theory, but history will prove him right one day.

Works Cited

Cooper, Aidan, and Walter E. Block. Why Malthus Will Always Be Wrong. Romanian Economic and Business Review, vol. 14, no. 4, (2019), pp. 32-41.

Heavey, Katharine, and Walter E. Block. Is Doomsday Approaching? A Critique of Malthus.

Malthus, Thomas Robert. An Essay on the Principle of Population. 1798.

Rahman, Mahfuzur. Validity of Malthusian Theory of Population in 20th Century in Terms of Using Scientific Technology to the Economic Growth and Strength. International Journal of Tax Economics and Management, vol. 1., no. 1, (2018), pp. 13-21.

Unat, Ebru. A review of Malthusian theory of Population under the Scope of Human Capital. FORCE: Focus on Research in Contemporary Economics, vol. 1., no. 2, (2020), pp. 132-147.

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Since the stock market offers an annual return of 10%, I will invest the $3260 into one of the renowned companies. In order to obtain the future value after a period of ten years, an Excel function will be used to calculate the value as shown FV= (0.1, 10, 0,-3260) = $8,455.60. In other words, by investing $3260 for ten years, the value will appreciate $8,455.60. Supposing I used the $3260 to clear the outstanding credit balance worth $3,000, I would remain with $260 to invest in the stock market. This will yield a future value of $674.37 (FV = (0.1, 10, 0, -260) = $674.37). Since using the bonus to invest will provide more income than using it to clear the debt, I will opt to invest the sign-on bonus for future benefits. Therefore, the more money I invest in the stock market, the larger the future wealth I will generate.

Abstract

For European nations economies to expand consistently and steadily, access to energy resources is essential. Power consumption is continuously increasing; hence a long-term strategy for unified European policy is required. However, European countries now rely significantly on imported natural gas and oil while gradually converting to renewable energy sources. The findings show that a high reliance on oil and natural gas imports causes inflation to rise, which weakens the economy. As a result, authorities must quicken their efforts to control gas use, get ready to transfer resources around the Eurozone in times of need, and secure supply from alternative suppliers and global LNG markets. In subsequent years, it would be vital to transition from natural resources, such as oil and gas, to renewable energy in order to mitigate geopolitical risks and maintain economic growth.

Introduction

Presently, the European Union nations top issues are energy independence and environmental sustainability. The accessibility of energy resources is crucial for European countries sustained and steady growth and economic growth. The continual rise in power consumption necessitates a long-term strategy for shared European policy. As of now, European nations are heavily dependent on importing natural gas and oil while slowly shifting toward renewable energy approaches. However, as will be shown further, dependence on these energy resources leads to less flexibility due to geopolitical and economic risks.

In this sense, there is a necessity for research on the oil and natural gas industry, its predominance in the European economy, and its effects, which helps gain insight into the scope of the issue for further problem-solving. The research questions are as follows: To what extent does European production depend on energy sources, and what are the risks of oil and natural gas imports? Therefore, the objective of the research is to see the dependence on economic resources of European countries and the extent to which the European economy can be paralyzed in case of energy shocks. The findings indicate that heavy reliance on oil and natural gas imports leads to increased inflation, which damages the economy.

Literature Review

An integrative notion, the issue of energy stability brings together the energy, economic, and environmental aspects. Since energy imports and exports might have a significant influence on the equilibrium of payments, the stability of energy production is intimately tied to micro- and macroeconomic dynamics (Degiannakis et al., 2018). The government budget may be significantly impacted by subsidies, taxes, and the expenses or earnings of state-owned businesses (Bluszcz, 2017). Energy prices also have a significant role in the rate of inflation and the economic competitiveness of a nation on the global stage.

Following petroleum-based goods, natural gas ranks as one of the most significant fuel sources in the Eurozone. In the industrial sector, it serves as the most potent source of energy, and almost 90% of the gas used in the eurozone countries is imported from other countries (Bluszcz, 2017). the part gas plays in the industrial process. Natural gas is a crucial production source for some industries, such as industrial chemicals and glass manufacturers (Di Bella et al., 2022). Yet, it is less so for other industries or is only used indirectly, like when it is used to generate electricity.

However, while having such a role in the Eurozone, natural gas and oil-based products are significantly reliant on imports in the European Union. Only renewable and nuclear energy is locally produced. Petroleum-based power is the most widely used in the economy, primarily due to its usage in the transportation industry (Gunnella et al., 2022). Contrarily, gas is the primary energy source that is used the most in industry, as well as by non-transportation businesses and residences (Gunnella et al., 2022). Given the adaptability of gas-run power stations and the total gas infrastructural facilities in adjusting to volatility in electricity consumption, gas further serves as the primary marginal fuel source in the production of electricity (Gunnella et al., 2022). This dependence has grown as countries move toward renewable energy sources, whose supply is based on erratic weather systems.

The fundamental reason why the European Unions energy production system varies from that of the rest of the world is that far less coal and oil are used to generate power there. Currently, the Eurozone uses just 45.8% of them, or 41% less than the worlds other nations. Presently, the Union uses 12.5% nuclear energy, 20% hydroelectric power, and up to 21.7% of sources of renewable energy (Bluszcz, 2017). According to the European Union 2030 program, there will be a decrease in the proportion of gas and oil used to produce electricity to a standard of 39% (Bluszcz, 2017). There will additionally be an increase in the proportion of nuclear energy to a standard of 22%, a rise in the balance of renewable fuels to a standard of 26%, and a decrease in the proportion of hydro-energy to a level of 13% (Bluszcz, 2017).

In this sense, such heavy reliance on the oil and natural gas sectors affects the European economy. Due to imports, the Eurozone economy is heavily susceptible to geopolitical risks. For decades, Russia has been a major supplier of gas and oil to Europe. Two-fifths of the energy utilized by Europeans in 2021 comes from Russia (World Economic Forum, 2022). More than a quarter of the oil products that the EU imports originate from Russia. The EU purchased gas from Russia for $108 billion (¬99 billion) in 2021, the worlds largest amount (World Economic Forum, 2022). Still, during the previous ten years, the EUs imports have decreased dramatically in volume. The Eurozone purchased energy from Russia in 2012 for a total of $173 billion (¬157 billion) (World Economic Forum, 2022). As a result, Eurozones economy will be affected by shocks in supply and demand.

Moreover, the degree to which shortages materialize and gas exchanges collapse will likely determine how a gas crisis affects GDP. The effect on GDP is determined by comparing the yield reduction over a period of 12 months to a benchmark scenario where the overall supply of gas in the Eurozone would be at average rates (Di Bella et al., 2022). In the event of a complete shutdown, there would probably be severe scarcity in some of the Central and Eastern European nations, and their GDPs would be negatively impacted by up to 6% (Di Bella et al., 2022). Therefore, in the face of unbalanced supply and demand, the Eurozone economy might experience inflation and decreased GDP.

Method

The method that was chosen for this research is secondary data analysis. The secondary data included statistics provided by European authorities on official website platforms. The method was preferred in order to see the correlation between oil and gas consumption and the economic state of Eurozone representatives. With an emphasis on the official data retrieved from government data, it is possible to provide recommendations and see the effects on the economy.

Results and Discussion

As has been mentioned, Europe relies heavily on natural gas and oil imports due to the unavailability of ones own sufficient storage of energy sources. However, as can be seen from the statistics provided by the Directorate-General of the European Commission, oil and natural gas imports damage the economy. In this sense, the prices of oil and natural gas play a significant role in influencing inflation, as can be seen from the correlation between Figure 1 and Figure 2. Rising inflation results from massive increases in oil and gas costs.

As a result, while the literature review mentioned that the economy of Europe requires a significant amount of energy resources to maintain its infrastructure, it does not mention the correlation between inflation and imports of energy products. The higher inflation started along with higher imports in 2021, spurred by the coronavirus virus. However, the situation has been exacerbated due to the Ukrainian conflict in 2022, which led to more considerable imports and greater inflation that resulted from the accumulation of other factors, such as supply and demand distortion and consumer confidence. Therefore, the economy of the Eurozone is affected by reliance on gas and oil imports, their prices, and the geopolitical risks that come with such dependence.

Conclusion and Policy Recommendations

Hence, the oil and natural gas sectors play an integral part in the growth of Eurozone infrastructure and yet destabilize its economy with geopolitical risks. However, the financial consequences of being heavily reliant on natural gas and oil may be significantly reduced. Efforts should concentrate on crisis readiness and risk management. Authorities must accelerate their measures to regulate gas consumption, prepare to distribute resources in crises throughout the Eurozone, and secure supplies from other suppliers and international LNG marketplaces. As the geopolitical and overall economic situations stabilize, there is a need for authorities to concentrate on the promotion of alternative sources of energy and provide incentives, implementing taxation incentives to reduce reliance on gas and oil.

References

Bluszcz, A. (2017). European economies in terms of energy dependence. Quality & Quantity, 51(4), 1531-1548. Web.

Degiannakis, S., Filis, G., & Arora, V. (2018). Oil prices and stock markets: a review of the theory and empirical evidence. The Energy Journal, 39(5), 85-130. Web.

Di Bella, G., Flanagan, M. J., Foda, K., Maslova, S., Pienkowski, A., Stuermer, M., & Toscani, F. G. (2022). Natural gas in Europe: The potential impact of disruptions to supply. IMF Working Papers, 2022(145), 1-48.

Eurostat. (2022-a). EU imports of energy products. Web.

Eurostat. (2022-b). Inflation in the Euro area. Web.

Gunnella, V., Jarvis, V., Morris r., & and Tóth, M. (2022). Natural gas dependence and risks to euro area activity. European Central Bank. Web.

World Economic Forum. (2022). How much energy does the EU import from Russia? Web.