Homework Assignment

Homework Assignment

Ans. 4

The question of whether IT investment contributes to productivity is an old one. The so-called “productivity paradox” has attracted the attention of researchers and practitioners in the last few years. We have moved from “we see computers everywhere except in the productivity statistics” (Solow, 1987), to “shortfall of evidence is not necessarily evidence of a shortfall” (Brynjolfsson, 1993), and, only recently, to precise -and positive- estimates of the marginal product of each dollar spent in IT (Brynjolfsson and Hitt, 1996). All evidence regarding this positive payoff has been gathered in the context of large firms, usually Fortune 500 companies, which were extremely worried about the possibility of having invested millions of dollars and remodeled their structures for something that was being proved to be unproductive.

Ans. 6

The housing market in US has greatly gone down and it has affected many sectors. The real estate agents are adversely affected, since their commission has decreased with the fall in value of the house. Similarly house owners are also adversely affected, since the value has severely decreased so if they sell their house they may not get the actual worth. The home builders on the other hand will also suffer and will not be able to generate enough revenue out of this business since the housing market is down. Similarly, banks and financial institutions will have to lend out mortgage loan on low interest rate. Now considering the newly married couples who are seeking to buy a new home will benefit from such situation and can buy houses at very low rate.

However, if the economy is booming then all the above mentioned groups may benefit except the couple who wants to buy a home, since the economy is booming so housing market is also on boom and the couple may have to pay high price for the same house that was available at cheap rate during economic downturn.

Ans. 9

Generally scarcity means when an individual has unlimited wants and needs but limited resources to fulfill those needs. However, in the case of a nation when it faces scarcity, it means that it is facing economic downturn. For instance, in recent times the most discussed scarcity problem Is water scarcity or water shortage. Water is foundation need of each human being and is essential for living. Thus, water crisis will lead to hike in overall prices as the nation may end up in importing water. This will severely affect the growth of economy. Similarly, some nations are suffering from food shortage or food scarcity. Any such scarcity will have a disastrous impact on the overall economy.

Ans. 12

Often it is seen that people oppose trade agreements and globalization. Trade agreements may encourage competition but relatively smaller domestic industries may not be able to conquer the foreign market, thus they eventually lose share and disappear.

Secondly, since most of the local industries are hammered by strong international competition, unemployment increases. Even if foreign firms run operations in the local country but they ...