Factors Affecting Exchange Rates Finance Essay - Free Essay Example

Sample details Pages: 6 Words: 1791 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? Exchange rates play a vital role in a countrys level of trade, which is critical to every free market economy in the world. One very basic definition of exchange rates is the rates at which one unit of a countrys currency can be exchanged into another one. As such, the observation of exchange rates is crucial and its one of the most watched, analysed and fluctuate economic variables. Don’t waste time! Our writers will create an original "Factors Affecting Exchange Rates Finance Essay" essay for you Create order But exchange rates do matter on a smaller scale as well: they impact the real return of an investors portfolio. Exchange rates for countries which operate under a flexible exchange rates system are determined through the foreign exchange rates also known as the FOREX. The forex market is believed to be the largest, most efficient and liquid financial markets. The forex market regroups international players through a network of computers that connect participants from across the globe. 2.1.1 Factors affecting exchange rates Exchange rates vary within second, like any commodity, the mechanism of exchange rates operates through factor of demand and supply. It is essential to know the main factors that cause these instant movements in exchange rates are: Interest rate and Inflation It is important to note that exchange rates, interest rates and inflation are three highly correlated factors. The manipulation of interest rates by Central Bank of its benchmark rates is reflected in the retail interest rates, that is, the price charged by banks or other financial institution in the business of lending money. Higher interest rates would boost up foreign investment by attracting investors seek higher return on investment. This will increase the demand for the domestic currency. Furthermore, if a country is underperforming, a measure to boost up consumption is by Central Bank to lower the interest rates thus making borrowing cheaper. https://fxtrade.oanda.com/learn/top-5-factors-that-affect-exchange -rates https://www.barclayswealth.com/international/foreign-exchange/currency-rates.htm# https://www.forexbite.com/trading-courses/fundamental/factors-that-affect-exchange-rate https://www.starfishfx.com/learn-forex-lesson-6 https://www.trading-point.com/foreign-exchange-prices https://www.investopedia.com/articles/basics/04/050704.asp#axzz2JBtSIgnn 2.2 Stock Market Index Stock Index or Stock market index is a way of measuring or tracking the value of a section of a stock market. In general, the computation of stock indices is done by combining the prices of selected stock (weighted average). Indices can be calculated using two different methodologies: Price- weighted index: whereby only the price of the stock is used to calculate the value of the index. Dow Jones is an example of such index. Market-weighted index: use the market capitalization of companies for calculating the value of the index. It is the most broadly-used indexes today, such as SP 500 and Hang-Seng indices. Stock Index is an important tool for investors or financial managers to make investment decision, for forecasting and assessing their returns on investment. Most widely followed stock indexes are from the US market, the SP 500, Nasdaq and the Dow Jones. Other significant international stock markets indexes are Nikkei 225 (Japan),  FTSE  100 (UK) and Hang Seng (Hong Kong). 2.3 Theoretical Review There exist no theoretical consensus on the existence or the direction of any relationship between stock prices and exchange rates. But instead, classical economic theory hypothesis discuss the linkage between stock prices and exchange rates trough two models: flow oriented model (Dornbusch and Fischer, 1980 and Gavin, 1989) and the stock-oriented model (Branson, 1983 and Frankel, 1983). The flow oriented model assumes that important determinants of exchange rates are through a countrys current account and balance of trade performance. Under this model, it is assumed that exchange rate affects the valuation of a firm through its competitiveness since it affects the cost of capital borrowed from overseas and also earnings made in foreign currencies. This in-turn influences real economic variables such as real income and output subsequently affects the current and future cash flows of companies and thus their stock prices. This goes in line with what had been discussed by Dornbusc her and Fischer which states that stock prices is defined as discounted present value of a firms expected future cash flows; thereby any events affecting a firms cash flow will be projected in the firms stock prices.  [1] As for the stock oriented models, as opposed to flow oriented model, stipulate that changes in stock prices cause changes in exchange rates through the use of financial account (capital account) transactions. Two distinct models can help in explaining the stock oriented model: the portfolio balance model and the monetary model. Under the portfolio model, it is assumed the investors diversified their portfolio as a measure of minimising risk by holding both domestic and foreign assets. As such, if prices of local assets increase, this will leads to an appreciation of the domestic currency. For instance, a rise (following a boom in the market) in the domestic assets prices will cause investors to demand more of local asset and subsequently selling foreign assets . This will lead to an increase in demand of local currency while increasing the supply of foreign currency causing a shift in the demand and supply of currencies which thereby induce an appreciation of the local currency. Another way of viewing this appreciation of the domestic currency following an increase in stock price; this will lead to an increase domestic wealth and hence demand for money, which in-turn raises the domestic interest rates. With higher interest rate, the domestic market is able to attract foreign capital, leading to an appreciation of the domestic currency. Thus, this establishes a positive causality linkage running from stock prices to exchange rates. The monetary model view exchange rates as being determine as a relative asset prices  [2]  , it assume that the current exchange rates reflects future expected exchange rates, which are affected by other factors than that of stock prices. Therefore under this model, stock prices and exchange rates should not show any linkage.  [3] The relationship between stock prices and exchange rates can be examined in the case of an import-dominant country and export-dominant country. Ma and Kao (1990) (missing) 2.4 Empirical Review During the past three decades, a large number of empirical studies tried to examine existence and direction of causality between Exchange Rates and Stock prices, using data of different stock indices as well as different time horizon. One of the earliest attempts in examining the nexus between exchange rates and stock prices was by Franck and Young (1972) who conclude that there was no significant interaction between the variables. Furthermore, studies at that time focuses on US market only and one of the most predominant studies was by Aggarwal (1981) which depicts the link between exchange rates and stock prices by analysing the correlation between the changes in the US trade-weighted exchange rates and changes in US stock markets indices using monthly data for the period 1974 to 1978. The study indicates a positive correlation during the period leading Aggarwal to conclude that the variables interacted in a manner consistent with the flow-model. In contrast, Soenen and Heniga r (1988) reported strong negative interaction using monthly data of the U.S. dollar effective exchange rate and U.S. stock market index for the period 1980 to 1986. One study which provides a foundation for further studies was by Ma and Kao (1990), whereby they test the degree of stock prices reaction to exchange rates changes in different countries. The differences among countries were explained by the nature of their economies, specifically by the extent to which the economy depends on exports and imports. As per their research, an appreciating currency negatively affects the domestic stock market for a country with larger export sector and positively affects the domestic stock market for an import-dominant country. Earlier studies relating to the issue used mainly statistical techniques such as simple regression and correlation to establish any relationship between stock prices and exchange rates. These studies suffer from a serious limitation as they omit to recognize the fact that most financial variables are non-stationary. Since early nineties, researches started using advance econometrics tools to find a relationship between the variables and their assorted results. Bahmani-Oskooee and Sohrabian (1992) was the first to employ causality tests in the examination of any linkage between stock prices and exchange rates. They used co-integration to investigate the relationship between monthly data on SP 500 index and US dollar effective exchange rate for the period 1973-1988. They showed bi-directional causality, at least in the short run. Their results affirm both stock-model and flow-model. As Ajayi and Mougoue (1996) search the relationship between exchange rates and stock indices for eight advanced economies using daily data from 1985 to 1991. According to results of study, there are significant short-run and long-run feedback relations between these two financial markets. An increase in stock price has a negative short-run effect as well as a positive long-run effect on domestic currency value. Also, currency depreciation has a negative both short-run and long-run effect on the stock market. Ajayi et al. (1998) take daily market indexes and exchange rates to investigate causal relations between stock returns and changes in exchange rates for seven advanced markets from 1985 to 1991 and eight Asian emerging markets from 1987 to 1991. The empirical results show that there is a unidirectional causality between the stock and currency markets in all the advanced economies while no consistent causal relations exist in the emerging economies. They explained the different results between advanced and emerging economies with the differences in the structure and characteristics of financial markets between these groups. Staverek (2005) investigated the causality between effective exchange rates and stock prices for eight EU countries and the USA. He employed vector error correction modelling, co-integration analysis and th e standard Granger causality test. The results appear to be unidirectional and causality runs from stock prices to exchange rates, the causal relations for the period 1993-2003 were stronger than in 1970-1992. Additionally for old EU countries (Austria, France, Germany, UK) and for USA the causality was stronger than for new EU countries (Czech Republic, Hungary, Poland, Slovakia). Richards et al. (2009) depicts the interaction between stock prices and exchange rates in an Australian context. Their results were in consistent with the portfolio balance model, Granger causality runs from stock prices to the exchange rates. Very few researchers actually analyse the dynamics relationship between Stock prices and Exchange rates in Africa. Adjasi et al. (2011) is among the few to investigate the relationship between these variables in seven African countries. The analysis was made for the period 1992 to 2005 by using vector autoregressive (VAR) cointegration and impulse response ana lysis to determine the long- and short-run linkages between stock prices and exchange rates. Their findings were, whether in short run or long run, cointegration was found for Tunisia, where exchange rate depreciation drives stock prices down. Furthermore, Shocks induced by either stock prices or the exchange rate are more protracted in Ghana, Kenya, Mauritius and Nigeria than in South Africa and Egypt.

Essay about Cinema and Religion - 684 Words

Cinema and Religion Entertainment media are contributing to the emergence of new and novel forms of spiritual and religious phenomena in our contemporary (and past) culture. The essays in this issue explore diverse facets of the morphing relationship between entertainment, spirituality and culture. Over the last century, the cinema has played a vital role in the expression and representation of Judeo-Christian religious practices and beliefs. Early cinema told the life of Christ in the Passion Play and Cecil B DeMille produced two spectacular versions of The Ten Commandments in 1923 and 1956. While cinema represented religious themes and figures, religious institutions also shaped the emergence of this moving image technology and its†¦show more content†¦In our Post-Millennial era the Heavens are the home for satellites rather than angels and the New Age emphasis upon the paranormal and extraterrestrial as alternative avenues for spiritual expression and self-transformation melds with the preva lent sense of an impending apocalypse that was reactivated by the spectacular disappearance of the Twin Towers on our television screens on 9-11, 2001. Where once God may have been a singular entity that designed the world in seven days, the multi-dimensional relationship between new and existing media technologies now activates multiple worlds and multiple entities. The God/s of the Multi-verse take many and multifarious forms from Elvis to Lara Croft and the signs of the Heaven or Hell emerge in the shopping mall, the television screen, the web site and the comic book panel. Our media heroes are worshipped and our creations come to life. The task of media research and theory is to articulate how these Post-Millennial forms of religiosity - how the uncanny spaces and the gods in the multiverse - are shaped by the media. How are these spaces of dread or icons of worship articulated? This issue provides a collection of original research and writing on entertainment forms – past and present. It presents an interdisciplinary focus by collating material from historians, theorists, philosophers and practitioners involved in the study and teaching of art, cinema, literature and new media. However, the advantage of Gods in theShow MoreRelatedImpact of Indian Cinema1090 Words   |  5 PagesIMPACT OF CINEMA ON THE INDIAN SOCIETY Cinema has become the most powerful form of Mass Media since the day it was introduced to the world. 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Even though her religion, she professed Adventist of seven-day religion, didnt let her go to the cinema, she always found the way to took me to the cinema. She and I enjoyed watch movies. We used to sit in the darkness room, with our faces illuminated from the reflection of the light which reboo ted from the screen, both absorbs in theRead MoreI Am A ----Year Old Christian Woman. I Come From Pakistan1256 Words   |  6 Pageslet others join me in my endeavors. In addition to the courses at G-ETS, my hope is to take help from the Religion and Film-ology department at the Northwestern University, and also as interact with people, to get to know their perception of the films that have shaped them and their lives and, how they think social justice is central to their lives. As a form of cultural capital, film and cinema are both reflections of a society’s ideals inasmuch as they are also what the philosopher Louis AlthusserRead MoreThe Role of the Holy Fool in the Context of Danish Cinema1580 Words   |  6 PagesGod’s wishes. In Denmark, Protestant traditions dominate the religious landscape, so the depiction of the holy fool must be adjusted accordingly. In order to understand the role of the holy fool in the context of Danish cinema, it is first necessary to look at the role of religion in Danish society. Starting in 1536, Denmark has transitioned into a country dominated by the Lutheran faith (Olden-Jà ¸rgensen 2002: 69). This transition marked the beginning of the struggle between reason and faith thatRead MoreTaking a Closer Look at Race Films Essay1241 Words   |  5 PagesIn early African American Cinema, filmmakers had a mission to move away from white perspectives on what it meant to be black (Stewart 225). Oftentimes, we would see black actors being portrayed in scenes as the antagonist committing crimes, as in the case of D.W. Griffith’s Birth of a Nation. Soon after Griffith released the film, filmmaker Oscar Micheaux forever changed American Independent Cinema with his â€Å"response† film Within Our Gates, which helped start the advent of race films (NAACP 1). SomeRead MoreEssay on Pure Cinema1702 Words à ‚  |  7 PagesItalian Neo realism; Pure Cinema 1. Ladri de Biccilette [Bicycle Thieves] (Vittorio De Sica) Do you agree with Andre Bazin that Ladri de Biccilette is an example of ‘pure cinema’? (Bazin [1971] p.60). To what extent is such a pure cinema possible and, in your opinion, which Italian Neo-realist film screened on the unit comes closest to it? Explain your reasoning. This essay will address the characteristics of ‘pure cinema’ and the extent of its practical nature. 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In fact, in his article, â€Å"Surviving Bollywood,† Madhava Prasad explains that the word Bollywood is actually based on â€Å"Tollywood.† In 1932, Wilford E. Deming, an American Engineer who claims to have supervised

E library free essay sample

The online eLibarary Management System is used to overcome the entire problem which they are facing currently, and making complete atomization of manual or semi automatic process of library management system. †¢Improve the search facility and members and library staff should get all the information in a second. †¢Should capable to use bar code reader for easy way to do book issue and receive process. †¢Library member should have limited and read-only access to the system via internet. †¢Library member should able to view member profile and transaction data pertinent only to them. †¢The supervisor should be able to enter or update master information like publisher’s details, authors and book details in one interface only, with all necessary product information being received by sales staff. †¢System Administrator must able to control the access rights by each users as per requirement. †¢The application should support the capability to use multi user environment. We will write a custom essay sample on E library or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page †¢The MIS Executive should able to generate all type of reports as and when required by the management. Project Members: This project is done in a group of two people. Project members are. 1. Atanu Maity 2. Problem Statement: Today most of the library is using either manual system for tracking the day to day activity or they are using desktop, stand-alone system to manage the day to day activity. In this proposed online eLibrary Management System it will run in internet or intranet and user can online check the book availability, they can search the books, library staff can issue, receive book, management can check the report from different location via internet. It can be used multi location also as it can be hosted in central location. Project Scope: From an end-user perspective, the eLibarary Management System Project consists of two functional elements: an enhanced searchable database for the search books, managing library members, issuing and receiving books and a report generation system. †¢Search Books, Managing Library Members, Issuing and Receiving Books: An enhanced atomized online system is developed to maintain Books, Authors, Publishers, Managing Library Members, Issuing and Receiving Books, calculate late fine, collecting the Fine, and maintain the history of transaction. †¢Report Generation: A Report Generation system will be developed for the user and management of eLibarary Management System. This MIS system will have both details and summary type reports for analysis the transaction, members, available books in stock Software Requirements: †¢. NET Framework 2. 0 / 3. 5 †¢IIS †¢SQL Server 2000 / 2005 Hardware Requirements: Processor: Preferably 2. 0 GHz or Greater. RAM : 512 MB or Greater. Limitations of the Software: This project was made as per user requirement and there is lots of further improvement can be done in the area of user interface, database performance, and query processing time. Etc. Future Enhancements: †¢Linking and integration of other online web sites. †¢Integration with other legacy accounting database through Web Services †¢Connection to third-party OLAP applications †¢In the area of data security and system security. †¢Provide more online tips and help. †¢Implementation of ISBN BAR code reader †¢To optimize the query which is embedded in the system.

Theory between Economics and Ethics. Adam Smith Problem

Introduction One might ask, ‘What is Adam Smith problem?’ Adam smith’s problem emerged at the end of the 19th century because of a controversy that occurred between Adam’s published books, ‘The Wealth of Nations’ edited in 1976 and ‘The Theory of Moral Sentiments’ written in 1759.Advertising We will write a custom report sample on Theory between Economics and Ethics. Adam Smith ‘Problem’ specifically for you for only $16.05 $11/page Learn More The discrepancy, noted by various scholars in the two books is what resulted to the coining of the phrase, â€Å"Adam Smith problem†. These controversies stand out in the meaning postulated through his two books with people declaring ‘The Wealth of Nations’ as the one that upholds the notion of self-interest. On the other hand, â€Å"The Theory of Moral Sentiments†, written in 1759 agitates or rather promotes munificence or commiseration as opposed to self-interest, evident in his later book (Smith 1978, p. 43). Therefore, the ideas postulated in ‘The Wealth of Nations’ relied largely on economics while those presented in his ‘The Theory of Moral Sediments’ based on ethics. This rift and disagreement of Adam’s thinking in the two books has led to many questions from several commentaries. The conflicting ideas range from the ethics, economic ideas, religion, selfishness and self-interests among many others. I also conquer with the views of these psychologists on the fact that somewhere, Adam Smith portrays controversy while his book entitled â€Å"Wealth of Nations† seems more concerned on the issue of self-interest and capitalism. On the other hand, the book on â€Å"The Theory of Moral Sentiments† addresses much on human psychology providing an insight to the understanding of the reasoning and thinking of human beings. In his book, ‘The Wealth of N ations’, Smith sought to provide a limelight on how the society was able to hang together irrespective of every person being busy following his own self-interest and yet not flying apart (Fitzgibbon 1995, P.32). He further sought to find out what it was that guided each person’s individual private businesses regardless of their traditions as well as achieving their needs as a society. â€Å"These questions resulted to ethics formulation of laws of the market, which he otherwise referred to as the â€Å"invisible hand† whereby passions and interests of men are directed in the interests of the whole society† (Smith 1978, p. 47). Furthermore, his law of the market simply reveals that any results of particular conducts in any collective structure stands a chance of leading to an explicit predictable consequence in future. It therefore illustrates to people on how the individual’s self-interest in an environment results into competition in that system. The resulting competition then leads to the production of goods that the society wants and in the required quantities and the prices that the society seems able to afford or rather pay.Advertising Looking for report on ethics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The self-interests stand out as the ones, which drive people into doing certain actions. However, the interests may lead to some of the individuals, holding up the society into ransom by charging exorbitant prices. Therefore, what regulates such like individuals is no more than competition. Therefore, the intermingling of people stands out as a major determinant of their motives. Such interactions stands a good chance of nurturing what Smith refers to as the most unpredicted outcome: social harmony. The theory also holds that, the producers of good must respect the demands of the society, which determine the quantity of the goods and wants. Based on the illustration that S mith provides, â€Å"if the consumers want more gloves as opposed to shoes, it implies that the demand of the gloves will increase as that of shoes fall, leading to fall in the prices of the shoes and an increase and a fall in the prices of shoes† (Smith 1978, p.51). This will further lead to adjustment or shift in the line of production as most producers will embark on production of more gloves and cut out the production of shoes in order to rip or benefit from the increased demand and high prices from the gloves hence creating stability in the market. As this happens, there is no any authority of any planned schedules of output put in place but rather self-interest and competition that acts against each gather brings forth this transformation. Therefore, this concept born by Adam to some extended still holds water in the modern social lives. Although the situation is not similar as it was in the 18th century, as nowadays, there exists large multinational and corporations wh o may stand the wave or the tide of the current demand and the law of the market in general. On his take on economic growth, Smith noted â€Å"no society can be flourishing and happy if its majority of people are poor and miserable about life’. He therefore demonstrated that society keeps on changing and improving, a change that is self propelled without for example parliament passage of laws but it moves because there is a powerful engine beneath it that propels these improvements. Meaning and Context of Selfishness according to Smith Adam Smith seems opposed to Hobbes’ take on self-interest that it serves as a guideline in every activity or action in that person involved. This means that each person individually profits from the action that he engages in. Smith expresses his ‘non-satisfied’ based on Hobbes’ view by presenting an example of a soldier who stands out as willing to sacrifice his life for the sake of his own country. He concurs with t he opinion that a wise man will first put the interest of his specific order or society before his own and sympathy should not to be accompanied by any sort of attitudes.Advertising We will write a custom report sample on Theory between Economics and Ethics. Adam Smith ‘Problem’ specifically for you for only $16.05 $11/page Learn More The above example of a soldier, who decides to engage in a war therefore risking his own life, does not support fully the notion of selfishness and the direct self-interest. The soldiers, as they engage in the fight, they do it without their interests in mind. Therefore, this view held by Adam provides a limelight on the current social disciplines: how the daily situations that people engage in without any instances of benefiting themselves. Therefore, it passes for a moral act postulated by Smith that certain actions that people do, do necessarily imply any motive of their own interest. A good example is the case of the soldiers, if they end up dying during the course of defending their country they may not benefit from the victory of defeat rather it is the country at large, which they representing that will benefit as a whole. Therefore, the book ‘Theory of Morals’ by Adam holds some weights in the modern social disciplines. On the other hand, sympathizing or showing benevolence to another person in the modern social life seems diminished. Individuals are not able to engage in an initiative constructively without being paid for the services or the activities they engage in. Therefore, in the current society, things have changed, as it was during the times of Adams as the society have evolved and adapted to new ways of life. The situations that people go through nowadays do not compare with those that Adam smith went through. However, this does not mean the dumping into a dustbin of all that Adam postulated in his theory of moral. The claim holds since some of his ideas an d concepts have played a constructive role in shaping the modern society, and therefore, they stand a chance of recognition and appreciation. In his ethics, Adam used a concept of impartial spectator as a balancing component in determining people’s interests to the interest of other people (Lubasz 1998, p.54). Hence, individuals should feature their ability to accommodate other people’s viewpoints. They need not to over rely or concentrate much on their own interests but they should provide some space to accommodate others point of view. This concept has some significance to modern lives of people especially in their day-to-day interactions. For instance, it seems moral to share something that is crucial to the livelihood of the society as opposed to concealing it for one’s own benefits. Example of these things includes basic things like water and land. Therefore, self-interest should not lead people into selfishness to the level of not considering their brother s and sisters who may be in need of them but unable to access them because of their own interests. Another aspect about Adam appears in his view about self-centeredness and selfishness. These are terms, which form the basis of people’s social life. Self centeredness means that a person’s direct interests act as the motives behind his/ her actions while on the other selfishness refers to focusing on interest which we are connected or associated with (Evensky 1993, P.201).Advertising Looking for report on ethics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Therefore, in the day-to-day socialization, people frequently face these difficulties especially when it comes to offering assistance to others. At many times, people would prefer giving their assistance be it financially or any other form to those people or institutions that they seem related to and which they know as opposed to those that they may not share any relationship, otherwise referred to as strangers. Likewise, sympathy provides the same problems as to why many people sympathize for one another. This comes from the fact that the person sympathizing believes or rather assumes to be in the same situation and therefore deciding to extend his/her assistance. He/she displays concern and interest in the person who requires other people’s sympathy. Adam smith admits the issue of selfishness as sometimes good to certain level though not good in case of a person who seems not directed to others completely. Therefore, people should not depict meanness to an extent that they cannot consider or show sympathy to their colleagues as that will automatically pass for immoral and consequently unacceptable in the society. Furthermore, in his theory of moral sentiments, Adam does not elaborate or expound on the notion of good and bad, but rather zeros on man implying that the standard or the choice of what is wrong or bad is determined by a person himself. Moreover, he points out that what people agree on as moral is right and fit for application. However and on the contrary, people declare what seems un-agreeable as unfit and thus wrong and therefore not worth accommodating. Adam is also of the view that human being by pursuing the moral faculties, is the only way of attaining happiness in our lives. He therefore acknowledges the fact the human being should do that which pleases God and which makes their lives happy (Griswold 1999, p.47). Therefore, this position by Adam shows how it seems important for the human race to do what is right for themselves and to go, as this will enable them attain happiness. The intention of a person should be the one that determines the actions of that particular person. Adam stands convinced that anybody should manifest good intentions on the courses of actions he wants to engage in as this will enable give consciously reflect upon the remedies or the problems or the results of his actions hence enabling him come up with a better strategy or ideas to enable him accomplish his actions. Content of Smith Ethics In his book ‘Theory of Moral Sentiments’, Adam does not clearly explain what makes good actions good and/or bad when done but seems to claim education as an intervention of people as it empowers them to make decision and approve or disapprove something. This problem manifests itself well in this theory of Adam Smith. In the modern society, this might not be true, as the society has marked certain actions as wrong. The issue of homosexuality and lesbianism serves as a good example of this scenario. There exist societies and religious groups that seem much opposed to such practices terming them as unclear with other proponents arguing that people need not to view this as a bad practice as it features no signs of immorality to them. Therefore, from these illustrations, it suffices to declare it a matter of one’s own choice and presumptions concerning what good or bad entails. According to Adam, judgment ensues after feelings. This judgment occurs after a distraction or disturbance of a person’s moral disposition. Judgment comes about when there occurs a surprise. Astonishments anticipate a response that seems not forthcoming and ones, which thereafter triggers a person to make judgments. This demonstrates clearly how people make assumptions about others in the day-to-day interactions, all of which seem based on these surprises or their inability to respond to issues that they consider important or rather vital. A working instance where people judge is whe n a person experiencing a blame case for doing a certain mistake does not answer the acquisition well when asked or fails completely to cooperate on the issues of discussion. According to Smith, having a feeling or simply or all sentiments is what he refers as to sympathize and that people only sympathize when they feel compassion and pity or when they share sorrows of their fellow colleagues. Adam’s theory of oral sentiments holds that people should do right, cherish in it, and avoid evils. Although he does not expound or elaborate on what constitutes evil or good, it seems morally upright for an individual to do that which he/she thinks or rather refers to as right (Otteson 2002, Para. 5). Therefore, applications of this view about right and evil are still a requirement as the society continues to educate its people on the benefit of having good virtues as well as avoiding the evils. Although, Adam does not specify or enlist them one by one, the modern society has gone a st ep ahead and earmarked those practices or behaviors that human being need to avoid and those that they are required to engage in. For instance, evil things that society disregards including, immorality, stealing among others. Therefore, it becomes a responsibility of every person to decide which path he or she wants to work in, as it seems more of a personal choice. Other significance of the Adam Smith problem on the modern social disciplines Adam’s problem has a great significance to the politics of these days. Many questions arise as to why a person chooses to enter into a political career. Is it because his/her own self-interest as postulated through the economic concept or is it because the person sympathizes with the electorate? Either reason, the decision to enter into politics is either to accomplish his/her interests or serve the people and elevate them from poverty (Coase 1997, Para.3). The work of Adam Smith seems to provide answers to these queries. All these reaso ns make or compel someone to enter into politics though it stands out as difficult to tell unless the person himself/herself tells the reasons why he or she entered into it. For instance, some people get to enter into politics in order to meet their own self-interests for instance; they want to get the right opportunity to carry out their businesses but not necessarily representing their electorates. Furthermore, as the theory of moral judgment postulates, some decide to enter into politics because of the love and sympathy the electorate shows. Therefore, because of the miserable lives some of the electorates go through, the person equips himself or herself with some intrinsic urge to enter into the political arena to defend the people’s rights and improve their living conditions. Overall, these two works of Smith, despite the evident clashes in thoughts, apply in the current life scenario and situations as what happens today reflects the ideas of Smith. Furthermore, in the s ocial arena, Adams problem still has an influence as most of the things that people engage in day in day out, seem best explained by his ideas. Take an example like the careers and religious affiliations that people chose to join or enter. All these choices remain intrinsically motivated by a person’s wish to achieve something after certain duration of time. These ambitions in life that people want to achieve follow because of the development of an interest in something. For instance, some people may decide to study medicine as a career path because they like the field intrinsically and they want to be above other because of the prestige and identity that comes with it. The theory also explains or provides answers to why people choose different areas of study as opposed to only one field. When it comes to economy, the works of Adam especially the wealth of nations comes in handy to explain the concept of capitalism and the need or the interest people wish to achieve. Economy is able to function because of the individual’s self-interest in amassing wealth, which eventually results to harmonization of society without their consciousness. This self-interest ushers in competition and thereby ensuring a self-regulating market, which eventually leads to a balanced, or equilibrium of demand and supply of products. Therefore, based on Adam’s book on ‘Wealth of Nations’, concepts and ideas may not appear fully in utility as his ideas provide a playing ground and a sense of understanding as to how the economy of the world operates. Regardless of his basing of his ideas on small business outlets, the ideas stand out as constructive further assisting largely in developing the current and modern economy. Conclusion Based on the expositions made in the paper, the issue of Adam Smith problem seems clear and to the point. The problem follows Adam’s two books namely ‘The Theory of Moral Sentiments’ otherwise abbreviated as TMS and ‘The Wealth of the Nations’ abbreviated as TWN. The contradiction evident in the two books forms the basis of the so-called ‘Adam Smith Problem’. Adam Smith has tried to project sympathy in his book â€Å"The Theory of Moral Sentiments,† as the basis that makes human beings show concern to their colleagues. Through the idea formation of people, they try to image how their colleagues feel and how they will feel if put in the same situation. This explains how people sometimes may feel miserable because of their beliefs or making assumptions that their fellow colleagues are miserable. Consequently, they feel happy if they learn that their colleagues are also happy as a result. Therefore, as long as some of his views do not hold to the current situation, it seems worth acknowledging of the impact or the effects his work has contributed in the current psychological world. From the discussion, and his work, it seems true that although human beings seem more concerned to self-love as opposed to others, they are able to reason and reach the best conclusions. As Adam notes, human beings are not right per se as they fault or wrong here and there and are engrossed with selfish interests. Reference List Coase, H., 1997. Adam smith’s view of Man.  Web. Evensky, J., 1993. Ethics and the Invisible Hand. Journal of Economic Perspectives, 7 (2): pp.197-205. Fitzgibbon, A., 1995. Adam Smith’s System of Liberty, Wealth and Virtue. London: Clarendon Press. Griswold, C., 1999. Adam Smith and the Virtues of Enlightenment. Cambridge: Cambridge University Press. Lubasz, H., 1998.  Adam Smith and the Invisible Hand -of the market. Edinburgh: Edinburgh University Press. Otteson, J., 2002. Adam Smith’s Marketplace of Life. Cambridge: Cambridge University Press. Smith, A., 1978. An Inquiry into the Nature and Causes of the Wealth of Nations. Indianapolis: Liberty Classics. This report on Theory between Economics and Ethics. Adam Smith ‘Problem’ was written and submitted by user Dustin Q. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.