Macroeconomics and Microeconomics - Macro4M Essay

Macroeconomics and Microeconomics - Macro4M - Essay Example The measure does not reflect the initial purpose as observed by economic policy makers. In that case, the output presented is not the actual output of the nation. In essence, it cannot tell the policy makers whether the economy produced more goods and services since the measure changes with prices and quantity. On the other hand, real GDP is adjusted for inflation or deflation. It measures GDP in constant prices. As a result, economic policy makers are able to identify the changes in the actual production of final goods (Boyes & Melvin, 2010, p.108). Indeed, it measures the quantity of goods and services a nation produces after eliminating the effects of price changes. Unlike nominal GDP which significantly reflects increased prices, real GDP indicates actual changes in the output. Economic policy makers would be more interested in more goods and services than higher prices in order to evaluate the economic status of the country. In fact, it is better to have nominal GDP rise due to higher output than due to higher prices. Economic policy makers want the nominal GDP to increase because of an increase in real GDP. If economic policy makers were to rely on the nominal GDP in determining national output, they would in many cases make ineffective decision. This is because, the large part reflected in the increasing output is as a result of price fluctuations. The actual output devoid of any influence is most important in national policy making. Therefore, they will always consider real GDP to be the reliable determinant of the output in order to make the most appropriate economic decision. Question two Gross domestic production (GDP) and other national income measure have been considered to be inadequate measure of social welfare (Elizabeth & UMAE, 2007, pp.20-25). This is because GDP measures all consumption, government spending and investments within a country plus exports, regardless of the citizenship of the investors or consumers. This measure counts air pollu tion, cigarette advertising as well as ambulances that clear the ways of bloodshed. It counts environmental destruction and the costs created by inhumane behaviors. The measure includes jails and correction facilities for the people who break the law. However, GDP does not include important social measures such as the health of the people, the quality of education, the beauty of culture, the strength of families. It does neither count the integrity of the leaders nor their intelligence. GDP does not measure the courage or wisdom of the people neither does it measure empathy nor devotion of the people. Essentially, GDP is a measure of many things but does not emphasize on the things that make life meaningful. There are conceptual problems noted with using GDP as a measure of social welfare that can be easily eliminated in order to make it a better measure of social welfare. First, the measure can be tailored to register monetary exchanges as well as social exchanges. Second, it shoul d not include commodities that lower social wellbeing such as weaponry and terrorism costs. The measure should place value on social practices like leisure-time and cultural qualities. Most important, GDP must not ignore the distribution of income and wealth within the society. This might include special consideration of the specific areas that can enhance comfortable living of the citizens such as offering employment opportunities.

Success of Product Repositioning Strategy for Class B Office Essay

Success of Product Repositioning Strategy for Class B Office Development in Moscow - Essay Example My company hired by a real estate investments fund, an owner of this property, received commercial contract to arrange marketing campaign and to sell these buildings as residential property. The reasoning behind this strategy is quite simple. On one hand, relatively small investors receive opportunity to invest into lucrative office property market in Moscow, which has 10-12% rate of return on investment compared to 5-6% that of residential property market. On the other hand, property developers receive so much desired cash significantly decreasing the whole property development cycle and improve their own rate of return on investment. The classical scheme (when office buildings are kept by developers to receive lease income or sold to strategic investors interested in regular income stream provided by lease payments) is modified with a new buy option for typical clients (lease holders) and completely a new option for residential property investors. Despite recent severe turbulence o n the equity markets and overall pessimistic attitude towards any long term investments our group managed to achieve remarkable results. The success of the strategy is proven by retail sale of a number of office buildings in Moscow. The purpose of this essay is to illustrate how theoretical strategic tools can be used in a real business situation to identify new business innovations and to assess how close the theory is to reality. The strategy theory undoubtedly provides useful tools for assessing current situation and identifying new opportunities. Elements of Five forces, basic supply – demand analyses, Value creation model, ERRC (Eliminate, Raise, Reduce, and Create) grid, reluctant customers and non-customers issues are theory tools used in the analysis. The analysis consists of macro and micro examination of the current commercial property industry situation in Moscow, and formulation of new opportunities in the office property sector of the industry based on the above analysis. The description of the real estate investment market in Russia In the situation of global market economic crisis, investors are becoming more risk averse and switching investment portfolios in favor of core assets like gold and real estate. Investments in property market in Russia in 2011 demonstrated 46% year on year growth with the highest volumes of 7 bn USD (See Exhibit 1 Investment volume dynamics), of which the commercial real estate sector accounts for about 95% (See Exhibit 1 Investment by sector). 2011 in Russia was remarkable by the rising number of foreign capital investments, which comprise around 45% of the total investment volume (See Exhibit Investment by investor origin). The reason for this is potentially high demand almost on all sorts of commercial property. Retail and office segments usually dominate the sector investments having 40% of total investment volume each (See Exhibit 1 Investment by sector). Moreover, the deal size increased in 2011: the numb er of deals exceeding 100 mn USD increased to 33% of total number of deals compared to 23% 2010. The market sector prime yields in Moscow stabilized at 9% in office and 11% in warehouse sectors in 2011 from the recent highs of 11.5% and 14.5% in 2009 (See 1 Exhibit Prime yield dynamics in Moscow) reaching pre crisis levels achieved by the market in 2007-2008. Historically, the office sector in Moscow has been the most attractive for