gov econ policy :: essays research papers

Government Economic Policy In 1988 the government of the day was at a downswing of the business cycle with high unemployment rate (UE%) coupled with high inflation. This caused the real income (YR) to fall. The populus of Australia had less purchasing power causing the aggregate demand to fall (ÓD). With the people of Australia spending less and firms not selling enough inventories the government (G) had less taxation revenue and with firms trying to cut costs, they laid off workers. This caused G non-profitable expenditure (G1) to increase and thus caused deficit budgets. This is when Private Investment (I), Economic Growth (GDP) and Private Consumption started to fall tremendously. In later years the G borrowed money from other nations because worsening Fiscal policy. The trouble was that the G was borrowing to pay G1 expenditure not G2. This caused a lack of I multiplier effect within the economy. The lack of money circulating in the economy lowered the Production Possibilities Curve (PPC) making the nation not able to provide enough goods and services for the people. If we look at the aggregate supply equation (Ó supply= GDP+ imports (M)), when GDP falls imports are the only option have enough supply to satisfy the economy. Making the overseas sector the only means cheap enough to buy goods and services from. Consequently this acted as a leakage because money was flowing into other nations and not into Australia’s. The PPC graph shows Australia’s shift in GDP with the PPC moving from A to B. therefore the difference between A and B is imports. This made economic conditions worse. As a result of the high inflation and UE% the national savings pool and thus private investment fell and foreign ownership rose. With all the money going out of the Australian economy and into others’ this caused stagflation. Stagflation occurs when an economy doesn’t grow (GDP doesn’t increase) but inflation increases. The inflation type is cost-push inflation. This graph shows cost-push inflation by showing the shift in aggregate supply causing a shift in the price (due to the law of demand) thus causing inflation, but in this case stagflation. Finally the Australian economy is ‘busted’ AKA recession. This was due to a number of factors one of these was the Terms of Trade (TOT) falling. This caused Australia’s main industry ‘agriculture’ to be severely effected. With the Interest rates ( I %) rising for long periods of time this caused strong decline in private investment, lessening the multiplier effect.

A Great Leader: Martin Luther King, Jr.

It was the 1963 March on Washington, attended by 250,000 people, 75 percent of them black, where Martin Luther King, Jr. delivered his â€Å"I Have a Dream† speech (Ruffin, 2001). The speech was aired on national television, reaching millions of Americans, including the President.The speech effectively raised civil consciousness by providing a clear path and goals for the Civil Rights Movement. Three decades after he was gunned down on a motel balcony in Memphis, Tennessee, Martin Luther King, Jr. remains to be the human rights icon of today whose influence has become a fixed part in the lives of those people he helped and touched (Pastan, 2004).Born on January 15, 1929 in Atlanta, Georgia he was the second of three children of Reverend Martin Luther King, Sr. and Alberta Williams King (Oates, 1994). Belonging to a middle-class family, King, Jr. and his siblings enjoyed relatively better lives than average black children.At the very young age, he was exposed to ideas and issue s of racial equality as his father was actively involved in the local chapter of National Association for the Advancement of Colored People who led a successful campaign to equalize the salaries of white and black teachers in Atlanta. Although he and his siblings had white playmates, they were not allowed to go to the same school with them.He attended Atlanta Public Schools, David T. Howard Elementary and then Booker T. Washington High School. When he was in high school, he joined an oratory contest and won second place. His happiness was short lived for he had a long bus ride to get home where passengers were segregated according to the color of their skin.The blacks had to stand and make room for the white people. At fifteen, he entered Atlanta's Morehouse College, then Crozer Theological Seminary in Chester, Pennsylvania and Boston University, where he earned his Ph.D in systematic theology. While in college at Cozer, King, Jr. became exposed to Mahatma Gandhi and was inspired by his advocacy of non-violent activism. He even visited the Gandhi family in India in 1959 to deepen his understanding of non-violent resistance and his commitment to the advocacy of the Civil Rights Movement in America (Sunnemark, 2004).After completing his education, he rejected most offers instead chose to become pastor of Montgomery, AL's Dexter Avenue Baptist Church. He was named president of the new Montgomery Improvement Association, which set his public career into motion. When he lead the local African-American community’s bus boycott, King, Jr. became a household name and threats started coming to him and his family. He and his groups demanded three things: (1) seating arrangements according to first come-first serve basis; (2) drivers equal treatments of white and black passengers; and (3) hire black drivers to predominantly black routes.Bus companies suffered losses as their customers are mainly black (Haskins, 1992). His house was bombed and he faced charges of co nspiracy against the bus company. The bus boycott lasted a year, characterized by violence and different forms of intimidation but King, Jr. did not fail to emphasize the Christian way to handle the attacks. He advised his group to â€Å"turn the other cheek†. In December 21, 1956, King, Jr. together with other boycott leaders, rode the first desegregated bus.The next few years were relatively quiet for King, Jr. but he remained to be active, getting involved with other civil rights movements. He founded the Southern Christian Leadership Conference (SCLC) to coordinate the protests which followed the success of the bus boycott (Garrow, 1968).The SCLC became involved with African-American students who voiced out their denunciation of segregated public facilities such as whites-only lunch counters. However, some students did not approve of King, Jr.’s participation in their cause (Kirk, 2007). They claimed that he was just all talk without taking real actions. He receive d all the credits from the hard work of the group. He kept the money, enjoyed the fame that truly belonged to others who sacrificed. This impression was furthered when he was able to spent lesser jail time compared to others who participated in sit-ins in an Atlanta department store and was arrested.They argued that King, Jr. used his mainstream appeal to leave the jail early through presidential candidate John F. Kennedy. John F. Kennedy needed King, Jr. to reach to the black people while the black people were in doubt whether King, Jr. was still the right leader to represent them. Versions of these criticisms surrounded him all through his life.Hallmark of his success was in 1964 when he received the Nobel Peace Prize (Bull, 2000). He accepted the award in behalf of the Civil Rights Movements. Early the next year, the Nobel Peace Prize winner was back in a jail cell. Such is the life of Martin Luther King, Jr. Though intrigues, threats and violence hunted him all his life, his con tributions to free America, blacks and whites, were incomparable.ReferencesBull, Angela (2000). DK Readers: Free At Last, The Story of Martin Luther King, Jr. NY: Dorling Kindersley Publishing, Inc.Garrow, David (1968). Bearing the Cross: Martin Luther King, Jr. and the Southern Christian Leadership Conference. NY: HarperCollins Publishers, Inc.Haskins, James (1992). The Life and Death of Martin Luther King, Jr. NY: Lothrop, Lee & Shepard Company.Kirk, John (2007). Martin Luther King, Jr. and The Civil Rights Movement: Controversies and Debates. NY: Palgrave Macmillan.Oates, Stephen (1994). Let the Trumpet Sound: A Life of Martin Luther King, Jr. NY: HarperCollins Publishers, Inc.Pastan, Amy (2004). Martin Luther King, Jr: Biography. NY: DK Publishing, Inc.Ruffin, Frances (2001). Martin Luther King, Jr. and the March on Washington. NY: Grosset & Dunlap.Sunnemark, Fredrik (2004). Ring Out Freedom! The Voice of Martin Luther King, Jr. and the Making of the Civil Rights Movement. IN: I ndiana University Press.  

Study On What A Mortgage Loan Is - Free Essay Example

Sample details Pages: 7 Words: 2113 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Essay any type Did you like this example? Mortgage Loan is a type of loan that is secured by real estate or personal property through the use of a mortgage note. Mortgage loan is an agreement to payback with interest in something during the due date. According to Anglo-American property law, a mortgage occurs when an owner pledges his interest as security or collateral for a loan. Don’t waste time! Our writers will create an original "Study On What A Mortgage Loan Is" essay for you Create order Furthermore, there are two types of mortgages loans which are conventional and jumbo. Beside this, a mortgage also known as it was a conveyance for land that on its face was absolute and conveyed a fee simple estate, but which was in fact conditional, and would be of no effect if certain conditions were not met. The mortgage debt remained in effect whether or not the land could successfully produce enough income to repay the debt. In theory, a mortgage required no further steps to be taken by the creditor, such as acceptance of crops and livestock, for repayment. Mortgage loans are generally structured as long-term loans, the periodic payments for which are similar to an annuity and calculated according to the time value of money formulae. The most basic arrangement would require a fixed monthly payment over a period of ten to thirty years, depending on local conditions. Over this period the principal component of the loan (the original loan) would be slowly paid down through a mortization. In practice, many variants are possible and common worldwide and within each country. Background Research Nobody can say for certain where the history of mortgage loans began, but the history of mortgage loan can be documented at least several thousand years back. No matter how many years old this system is, the basics have never changed. The world à ¢Ã¢â€š ¬Ã‹Å"mortgageà ¢Ã¢â€š ¬Ã¢â€ž ¢, the à ¢Ã¢â€š ¬Ã‹Å"mortà ¢Ã¢â€š ¬Ã¢â€ž ¢ is from the Latin word with the meaning of death and à ¢Ã¢â€š ¬Ã‹Å"gageà ¢Ã¢â€š ¬Ã¢â€ž ¢ is from the sense of that word which means a pledge to forfeit something of value if a debt is not repaid. During the early 1990s mortgages moved from Europe to settle in America as land ownership increased. However, World War II changed the mortgage scene dramatically. It coming home and entering the workforce. A lot of people become avid consumers as the economy boomed so the demand for mortgages occurred. Nowadays, Mortgage has become a part of our lives as it is something we wouldn`t think about as far as their origin. The purpose of providing mortgage loan i s to help customers or public to buy their ownership. For example, people mortgage a loan to buy house, car and so on. Literature Review According to John Daniel (Nov 2006), different country might have different mortgage market due to tax as different tax rules have a significant implication for customer, fixed-rate mortgage long term period, variable-rate mortgage rates set by lender, ratio of fixed-rate to variable-rate mortgages as FRMs and VRMs can show significantly different prepayment behaviour patters., partial prepayments subprime or low-document loans, and composition of Mortgage-backed securities. Lisa Schreiber (Sept 2009) says, à ¢Ã¢â€š ¬Ã…“We focus on managing risk. It`s a very important component of our philosophy. There are many types of mortgages used globally, but several factors broadly define the characteristics of the mortgage. All of these may be subject to local regulation and legal requirements. First and foremost, a mortgage loan typically consists of conventional mortgage loan and jumbo mortgage loan. Conventional mortgage loan is a mortgage in which the interest rate does not cha nges. Conventional mortgage loan also called as Fixed-Rate Mortgage (FRM). Fixed Rate Mortgages, the interest rate and monthly payment, remains fixed for the term of loan. This category of loan has a comparatively low rate of interest. According to Jrl Fut Mark (Oct, 2008), the value of FRMs depends on interest rates, the house value, and mortgage maturity. Nevertheless, only a few people choose for this type of mortgage loans in Malaysia. This is because conventional mortgage becomes unpredictable after the fixed rate gets over on the mortgage loan with a regular period of time. In general, the longer the term of your mortgage loan, the larger the premium between a fixed and adjustable rate mortgage. Jumbo mortgage is a loan amount exceeding the conforming loan limits. It is a loan that does not conform to maximum limits. Lenders take a large risk in lending Jumbo mortgage. Lenders ask for high down payment for Jumbo mortgage because it will be harder to resell the property if i t is on a luxury property defaults. Nowadays, housing prices are increased and it bring the jumbo mortgage trends to a higher stage. The limited availability of it is slowing down the recovery housing market. Buyer who would normally qualify for jumbo mortgage is more likely to treat them as high risk. Adjustable Rate Mortgages, the interest rate is fixed for a period of time, after which it will periodically adjust up or down to some market index. Adjustable rates transfer part of the interest rate risk from the lender to the borrower, and thus are widely used where unpredictable interest rates make fixed rate loans difficult to obtain. Since the risk is transferred, lenders will usually make the initial interest rate of the ARMs note anywhere from 0.5% to 2% lower than the average 30-year fixed rate. In most scenarios, the savings from an ARM outweigh its risks, making them an attractive option for people who are planning to keep a mortgage for ten years or less. Mortgage Loan Application Process 1. Check current Interest rates @ review Credit report 2. Filling out the 4. Mortgage approval Mortgage application with conditions 3. Provides mortgage Documents Four steps of application of mortgage loan à ¢Ã¢â€š ¬Ã‹Å"To get a mortgage now, you better walk on water,à ¢Ã¢â€š ¬? says San Diego mortgage broker Victoria Johnson. (Nov 2000) à ¢Ã¢â€š ¬Ã‹Å"If you are down on one of those, you don`t want to be down on the other two,à ¢Ã¢â€š ¬? says McClung. (Aug 2008) These shows that, as a customer we need to choose what mortgage loan that we need and how to choose the mortgage correctly. Below are the steps that we need to do when we are applying for a loan. Before applying for a loan, customer should check the current interest rates, review his or her credit report then begin to shop for a lender. When comparing lenders, customer should consider such factors as lock-in policies, fees and loan options. In general, the interest rates will change time to time or it changes between the time when the customer start the mortgage application and the time when it is approved. Nevertheless, it is wise to compare the rate who offers by different lenders before customer apply for his or her mortgage. Second, customer will need to fill out the mortgage application after he or she has chosen a mortgage lender. Be sure to complete the application honestly and completely because it could seriously hurt his or her chances of getting the mortgage if customer inadvertently put false information on the application. If customer is disavowed a mortgage due to a falsified application, he or she might lose the down payment that it has paid. So take your time to filling out the application accurately. Third, customer will be required to provide a series of documents to the mortgage lender during the mortgage loan application process. Be preparing the original document as well and be sure to have a copy of each document for your own records when apply for a mortgage. Forth, mortgage approval comes with certain conditions. These conditions may include a satisfactory appraisal, termite inspection, and so on. Ask the lender aggressive on time and what conditions and requirements you need to meet. If anything that is significant changes during the mortgage application process, please tell the lender as soon as possible because on closing day, customer will be certifying that no significant changes have occurred. If the customer did not do this action it will be assumed as cheating and the customer might lose the down payment that it has paid. Mortgage Loan Calculation Assumed that a customer loaned a bank $1,000,000 at a 5% interest rate and it is compounded annually, the bank would pay customer $50,000 per year. So why cant the customer get a $1,000,000 mortgage and pay the bank $55,000 a year, let them earn a 10% profit? This is because the traditional mortgage is designed so customer will end up owning the house when the mortgage is paid off. The example above would apply to an interest only mortgage, where customers are renting the house only from the bank. After 30 years, there will be zero equity. Its the reverse of your loaning $1,000,000 to the bank and earning $50,000 per year in interest. Actually, the bank is renting the principal from customer, the same way customer rent a house from the bank with an interest only mortgage. Now, letà ¢Ã¢â€š ¬Ã¢â€ž ¢s say customer agreed to loan the bank $1,000,000 for 10 years, with the interest being compounded onto the principal annually. Using simple interest compounded annually, the situat ion would look like this Year Principal Interest One 1,000,000 50,000 Two 1,050,000 52,500 Three 1,100,250 55125 Four 1,157,625 57881.25 Five 1,215,506.25 60,775.31 Six 1,276,281,56 63,814.08 Seven 1,340,095.65 67,004.78 Eight 1,407100.42 70,355.02 Nine 1,477,455.44 73,872.77 Ten 1,551,328.22 77,566.41 After 10 years, the principal has grown by over 50%, from $1,000,000 to $1,551,328.22. The amount of interest that customer are earning every year has also grown over 50%, even though the interest rate is fixed, at 5% compounded annually. In order to illustrate the effect compound interest has on mortgage payments. With mortgages, we want to find the monthly payment required to totally pay down a borrowed principal over the course a number of payments. The standard mortgage formula is: M = P [ i(1 + i)n ] / [ (1 + i)n 1] M is the monthly payment. i = r/12. This formula can be express in many different ways, but this one has avoids negative exponentials which confuse some calculators. For $1,000,000 mortgage at 5% compounded monthly for 15 years. We would first solve for i as i = 0.05 / 12 = 0.004167 and n as 12 x 15 = 180 monthly payments Next we would solve for (1 + i)n = (1.004167)180= 2.11383 Now our formula reads M = P [ i(2.11383)] / [ 2.11383- 1] which simplifies to M = P [.004167 x 2.11383] / 1.11383 or M = $1,000,000 x 0.00790 = $7,908.15 Now, one important feature of the mortgage formula is that its the principal is multiplied last, meaning that we can develop a table of mortgage rate multipliers for any fixed time period that will yield a monthly payment simply by multiplying the principal borrowed. Calculation of how much interest customer had pay the bank over the course of the mortgage, just multiply the amount of the monthly payment by the number of pa yments and subtract the principal: ($791.81 x 180) $100,000 = $142,525.80 $100,000 = $42,525.80 The only bright side to paying the bank all of that interest is that in most cases, its deductible on the Federal income tax in the in the years that its paid. The savings to customer depends on what tax bracket are customer in. If customer are only in the 10% tax bracket to start with, he or she will only getting a 10% discount on the taxes for carrying a mortgage. If he or she in the 25% tax bracket, he or she are getting a 25% discount. Conclusion As a conclusion, normally customer mortgages a loan is to purchase a house, car or equipment. Mortgage loan is subdivided into two primary types which are fixed rate and variable rate. A fixed-rate mortgage is a loan that charges a fixed set of rate throughout the life-long of the loan. It allows purchasers to spread out the cost of an expensive purchase which enables them to make a smaller, predictable payment over a long period of time. A variable-rate mortgage is a loan which rates of interest does not stay the same all the time. The monthly payment will change with the changes of the rate of interest. For example, an increase in the rate of interest will cause the monthly payment to move higher and vice-versa. Apart from these, Variable-rates loan have lower initial interest rates compared to fixed-rates loan which results in a lower monthly mortgage payments. With variable-rates loan, more buyers are able to afford more expensive homes than they would be able to purchase wi th a fixed-rate mortgage. A monthly mortgage payment will consists of a series of components comprising of principal, interest, taxes and insurances. Besides the money required covering the mortgage loan, obtaining a mortgage requires an amount of related money to cover the down payment and closing costs. The amortization schedule that shows the true cost of purchasing a home, including the amount of interest paid is often neglected. A solid  credit-rating and a mortgage  pre-approval will both be beneficial when you are shopping for a home. A mortgage pre-approval shows whether a buyer is able to make purchases. There are many types of loans and potential lenders out there. It is advisable that we search thoroughly for the best loans that suit our budget and lifestyle.