Rohit's nukkad

Sunday, February 15, 2009

5 Ineresting Economics Questions you wanted to know the answer to

1. Why are companies referest to as Ltd, Inc, Gmbh or S.A ?

At heart of capitalism is private ownership and a limited liability. A limited liability assures that the owners of a company will never have to pay more than they have invested in the company. The names of the companies around the world reflect this limited liability "Gmbh" - Gesellschaft(German) is a Privatly held company in Germany. In the US its known as "Inc" - Incorporated, it is known as "Ltd" in other English-speaking countries."S.A" in French and Spanish-speaking countries.

2. What is Bankruptcy?

Bankruptcy, in modern economic climate deals with an ailing company that cannot pay its debts. It has a choice of either liquidating its assets immediately or may be allowed to attempt to recover under a supervised legal framework. In most capitalist countries, bankrupt companies are first encouraged to try to continue operating under legal supervision in order to generate enough money to pay off creditors. Rehabilitation of an ailing company allows it to reorganize and possibility of returning to profitability - "Chapter 11" (US), or "Administration"(UK). If the company still has no real prospect of recovery then it is forced into "liquidation" known as "Chapter Seven" in United States or "receivership" in Britain.

3. How is Gold Used in International investments?

Gold can be traded in every country and currency imaginable. Until recently gold served as a uniquely liquid investment that could be exchanged anywhere in the world at any given time. Now it is perceived mostly as “hedge” - provide a stable refuge for investors in inflationary times when financial instruments like stock or bonds tend to lose their value.

4. How does a Swiss Account work?

Switzerland is one of the few countries in the world, which by law guarantees the secrecy of its bank accounts. As long as the person doesn’t have anything considered illegal in Switzerland including tax evasion in home country, the bank won’t reveal the identity. Opening a bank account in Switzerland is relatively easy and Swiss bankers are known to be dependable, trustworthy and discreet. These qualities make Switzerland a world banking center, but also money laundering center.

5. How is Wealth Determined around the world?

Countries have different ways to determine wealth, and each country tends to look at a different group of statistics. One way to determine using the salary earned in each country. However salaries are actually used to buy products or services. Hence salary’s “purchasing power” tells us how much the salary can buy. Comparing the costs of a group of goods and services gives us a more reliable exchange rate, called “purchasing power parity” to determine wealth across the world.

Coutesy :- A Beginner's Guide to the World Economy - Randy Charles Epping.