NATIONAL FARM AND GARDEN, INC., BACKGROUND

(Everyone reads.)

National Farm and Garden, Inc. (NFG) was incorporated in Nebraska in 1935 and has been a leading supplier of farming equipment for more than sixty years. Over the last five years, however, demand for NFG’s flagship product, the Ultra Tiller, has been declining. To make matters worse, NFG’s market lead was overtaken by the competition for the first time two years ago.

Last year, NFG expanded its product line with the Turbo Tiller, a highly advertised and much anticipated upgrade to the Ultra Tiller. The product launch was timed to coincide with last year’s fall tilling season. Due to the timing of the release, the research and development process was shortened, and the manufacturing department was pressed to produce high numbers to meet anticipated demand. All responsible divisions approved the product launch and schedule. In order to release the product as scheduled, however, the manufacturing department was forced to employ the safety shield design from the Ultra Tiller. When attached, the shield protects the user from the tilling blades; however, it is necessary to remove the shield in order to clean the product. Because of differences between the Ultra and Turbo models, the Turbo’s shield is very difficult to reattach after cleaning and the process requires specialized tools. Owners can have the supplier make modifications on site or at the sales location, or they can leave the shield off and continue operation. All product documentation warns against operating the tiller without the shield, and the product itself has three distinct warning labels on it. Modifications are now available that allow for the shield to be removed and replaced quite easily, and these modifications are covered by the factory warranty. However, most owners have elected to operate the Turbo Tiller without the safety shield after its first cleaning.

Over the last year, a number of farm animals (chickens, cats, a dog, and two goats) have been killed by Turbo Tillers being operated without the guard. Two weeks ago, a seven-year-old Nebraska boy riding on the back of an unshielded tiller fell off. When the tiller caught the sleeve of his shirt, his arm was permanently mangled and required amputation. One of the child’s parents owns the local newspaper, which ran a story about the accident on the front page of the local paper the next day. NFG’s CEO has called an emergency meeting with the company’s divisional vice president, director of product development, director of manufacturing, director of sales, and vice president of public relations to discuss the situation and develop a plan of action.

Divisional Vice President

You are the divisional vice president and have been with the company for many years. Historically, you have not been a pushy individual and generally prefer to stay in the background. When there are major decisions to be made or crises to address, you are frequently not available. The CEO recently put you on a sixty-day action plan to improve your division’s output; failure to achieve this plan will result in your termination, even though you are just a few years shy of retirement. Therefore, you now find it necessary to satisfy not only your own objectives, but the CEO’s very high expectations as well. This has caused great turmoil within all divisions because you place increasing pressure on your subordinates.

As the divisional vice president, you are focused on coordinating all departments. You are responsible for output from the sales, manufacturing, and field service engineering departments. The research and development (R&D) department, which must sign off on all new products before they are approved for production, is not under your supervision.

Recently, you received a memorandum from the director of R&D outlining some potential problems with the development and testing of the Turbo Tiller. The memo was copied to you, the director of manufacturing, and the director of sales. You agreed with the director of manufacturing not to share the contents of the memo with your CEO because you felt that bringing this small concern to his attention would cause unnecessary problems for each division. Moreover, the CEO is known for his abrasive personality and has a history of yelling at bearers of bad news.

The CEO has called an all-hands emergency meeting at 7:00 a.m. tomorrow. You are expected to bring all knowledge of this situation with you for discussion and creation of a comprehensive action plan.

Director of Product Development

You are the director of product development. Although you have a master’s degree in mechanical engineering from Stanford University, you are originally from the inner-city area of Chicago, where you grew up in the school of “hard knocks.” From previous experience, you tend to be rather uncompromising about products that are engineered within your organization. Your engineering team has been very successful in the past, and you are quite proud of the many new successful products your department has developed.

You originally fast-tracked the Turbo Tiller product due to constant pressure, particularly from the director of sales. However, on further investigation, you have become concerned about the implementation of the product’s safety shield. Consequently, you recently sent a memorandum to the director of manufacturing, director of sales, and the divisional vice president outlining the fact that consumers could sue National Farm and Garden under the state’s strict liability doctrine, which holds manufacturers, distributors, wholesalers, retailers, and others in the chain of distribution of a defective product liable for the damages caused by the defect, regardless of fault. Moreover, plaintiffs could cite the state’s concept of defect of manufacture when the manufacturer fails to (1) properly assemble a product, (2) properly test a product, and (3) adequately check the quality of the product component parts or materials used in manufacturing. You now believe that NFG has violated all three of these concepts of “defects of manufacture.”

Having received no response to this memo, you are contemplating whether to escalate the issue by going to the CEO. The only reason you have not already done so is the CEO’s historic temper when confronted with negative situations.

The CEO has called an all-hands emergency meeting at 7:00 a.m. tomorrow. You are expected to bring all knowledge of this situation with you for discussion and creation of a comprehensive action plan.

Director of Manufacturing

You are the director of manufacturing. A graduate from the University of Alabama with a B.S. in industrial manufacturing, you have worked for NFG for twenty years. You are required to provide reports to top management on a weekly, monthly, and quarterly basis. Top management creates the exact measures of performance that you provide; although you have a say in what these reports focus on, you often disagree with their exact focus. Your overall performance is evaluated based more on numbers of units produced than on quality. Despite this, you enjoy working for the company. You consider the group like family, and especially appreciate the effort the CEO has made to make you feel valued and supported.

You are aware of the difficulties that the Ultra Tiller guard poses when used on the Turbo Tiller. Due to the Turbo Tiller’s larger size, the guard is nearly impossible to replace after removal. Re-attachment of the shield requires a professional machine shop and additional assistance. However, with your knowledge of statistics, you know that, even without the shield in place, the chances of an animal or a person being injured by the Turbo Tiller are small. Thus, you agreed with the divisional vice president to bury a memo sent by the director of R&D stating related concerns. You both felt that the risks were small enough and that raising these concerns to your superiors would only cause headaches and paperwork. Furthermore, you need to stay on schedule in order to reach your volume goals if you are to earn your bonus.

You have also received several e-mails from the manager of the field service engineering department about reports of farmers operating the Turbo Tiller without the guard. When you requested statistical data regarding the number and location of occurrences and any related accidents, the field service engineering manager replied with field data indicating that more than 85 percent of all Turbo Tillers are eventually operated without the guard.

The CEO has called an all-hands emergency meeting at 7:00 a.m. tomorrow. You are expected to bring all knowledge of this situation with you for discussion and creation of a comprehensive action plan.

Director of Sales

You are the director of sales and have been with NFG for more than ten years. You were recruited from a competing firm and have more than twenty-five years of sales experience in the industry. Because of sagging sales, you face extreme pressure from above to meet your numbers. However, you feel that sales forecasts have been set unrealistically. Furthermore, these aggressive forecasts create churning within your department as your sales staff consistently complains that their quotas are unrealistic. Although you are adamant that declining sales are industry and product offering issues, you are reluctant to raise these concerns to the CEO because of his history of anger directed at messengers bearing bad news. You have witnessed this phenomenon firsthand as the CEO literally screamed at a coworker who brought a problem to his attention. On the other hand, the CEO has promised you a new BMW if your department reaches its numbers this year. Of course, you enthusiastically promised to achieve these results.

The Turbo Tiller has been a much-anticipated addition to your stagnant product portfolio, but you were concerned that it would be delayed due to red tape and wrote daily e-mails to the R&D manager about getting it to market on a timely basis. You have received a memo from the R&D manager about some legal concerns over the Turbo Tiller. However, you feel that these concerns are manufacturing’s problem, not your department’s. Furthermore, because the director of manufacturing received a carbon copy of the memo, you are sure that the concerns will be addressed appropriately.

You have organized training on this product for your sales staff that included proper operating procedures and the dangers of standing within five feet of the tilling blades. In addition to these training sessions, you arranged a separate class on how to address and downplay these concerns with customers.

The CEO has called an all-hands emergency meeting at 7:00 a.m. tomorrow. You are expected to bring all knowledge of this situation with you for discussion and creation of a comprehensive action plan.

Here is the question. please help me to answer this:

1) List the key stakeholders in this scenario.

2) What actions will you take with the family of the injured boy?

3) What actions will you take to move customers from the old tiller to the new version?

4) Are there any other actions you think that should be done?

Read the following case, and fill out the table below based on the case:

Horizon Insurance (HI) was a full-service regional insurance agency that has done all the printing and publishing of its own promotional brochures, newsletters, informational pamphlets, and required regulatory reports. Linda Wolfe, the business manager of the agency, had for some time thought that the firm might save money and get equally good services by contracting the publishing work G-Art Inc. She asked G-Art Inc. to give her a quote at the same time she asked Bob Myer her controller to prepare an up-to-date statement of the cost of operating Horizon’s publishing department.

Within a few days, the quote from G-Art Inc. arrived. The firm was prepared to provide all the required publications work for $ 410,000 a year with the contract running a guaranteed term of 4 years with annual renewals thereafter. If the estimated number or assumed mix of publications changed in any given year beyond the baseline planning estimates, the contract price would be adjusted accordingly. Wolfe compared G-Art’s quote with the internal cost figures prepared by Myer:

Table 1; Annual cost of operating HI’s publications department: Myer’s figures.

Materials                                                                                                             $40,000

Labor                                                                                                                 $290,000

Department overhead

Manager’s salary                                                                                            $48,000                                  

Allocated cost of office space                                  $10,000

Depreciation of equipment                                       $32,500

Other expenses (travel, education, ect.)               $25,000

                                                                                                                             $115,500

                                                                                                                            $445,500

Share of company administrative overhead                                         $30,000

Total cost of department for year                                                          $475,000

Wolfe’s initial conclusion was to close Horizon’s publications department and immediately sign the contact offered by G-Art. However, she felt it prudent to give the manager of the department, George Richards, an opportunity to question that tentative conclusion. She called him in and put the facts before him, while at the same time making it clear that Richards’ own job at the agency was not in jeopardy.

Richard came up with the following to keep in mind before his department was closed:

For instance, what will you do with the customed graphic design and printing equipment? It cost $260,000 four years ago, but you’d be lucky if you got $80,000 for it now, even though we had planned on using it for another four years at least. Andthen there is the sizable supply of print materials that includes a lot of specialized ink, specialty card stock, paper, envelopes ect. We bought the custom supplies a year ago when we were pretty flush with cash. At that time it cost us about 125,000 and at the rate we are using it now, it will last us another four years. We used up about one-fifth of it last year. As best as I an tell, Myer’s figure of $40,000 for materials includes about $25,000 for these customized sipplies and $15,000 for generic supplies we use on a regular basis. If we were to buy these custom supplies today it would probably cost us 110% of what we paid for it. But if we try to sell it, we would probably get only 60% of what we paid for it.

Wolf thought that Myer ought to be present during this discussion. She called him in and put Richard’s points to him. Myer said:

If we are going to have all of this talk about “what will happen if” don’t forget the problem of space we’re faced with. We’re paying 12,000 a year in outside office space. If we close Richard’s department we could use of the freed-up space as office space and not need to rent it on the outside.

Wolfe replied:

That’s a good point, though I must say I’m a bit worried about the people if we close the publications department. I don’t think we can find room for any of them elsewhere in the firm. I could see whether G-rt can take any of them, but some of them are getting odler. There’s Walters and Hines, for example. They’ve been with us since they left school 40 years ago, and I think their contract requires us to give them a total severance payoff of about $60,000 each, payable in equal amounts over four years.

Richards showed some relief at this. “ But I still don’t like Myer’s figures” he said. “What about the $30,000 for general administrative overhead. You surely don’t expect to fire anyone in the corporate office if Im closed, do you?

“Probably not” said Myer, but someone has to pay for those costs. We can’t ignore them when we look at an individual department, because fi we do that with each department in turn, we will convince ourselves that accountants, laywers, vice presidents, and the like don’t’ have to be paid for. And they do, believe me”

Clarification: In the fact set, Custom Supplies are expected to sell for 60% of what the company paid for them. Assume (to make numbers cleaner), that this is 60% of their 'current' book value of $100,000 (derived from the fact set), not the original cost.

Question: Fill out the table above and determine the question below:

What is the annual difference in expense (accounting cost) if Horizon Insurance outsources to G-Art? Do not consider the gain or loss from the sale of special materials or equipment in this calculation. It might be helpful to use the worksheet provided in the case.

It is common practice in America for companies to take out corporate-owned life insurance policies on their leaders and senior management, so that the company can offset the cost of replacing them if they die. However, some companies have begun to extend this practice to their low-level employees, which have become known as “dead peasant” policies. Although profitable for the business, it is often the case that the families of these low-level employees are not aware that this step has been taken and the practice has been outlawed in some states. Is this practice ethical for all employees? Or just top corporate leaders?

Case

Insuring the lives of top executives is common practice in corporate America. The death of a CEO or CFO can put the future of the company at risk; replacing these individuals can be costly. Large companies often take out life insurance policies, called corporate-owned life insurance (COLI) polices, on their leaders to help offset these expenses. Some firms extend their COLI policies to cover low-level employees. These policies, sometimes referred to as “dead peasant” or “dead janitor” insurance, are taken out on rank-and-file workers like convenience store clerks, electrical linemen, and cake decorators. The company pays the premiums and receives the death benefits when the employee dies. Often, workers and their surviving family members do not know that these policies exist, prompting one attorney to call these policies corporate America's “dirty little secret” (Mason, 2002). In a case featured in the film Capitalism: A Love Story, the widow of an Amegy bank project manager discovered that the bank had received a US$3.8 million payout after her husband's death. Her husband's salary, before the bank fired him, was US$70,000. (She later sued Amegy and settled for an undisclosed sum.) In another instance, Wal-Mart collected US$381,000 after the death of an employee but didn't reveal that fact to his spouse. Dead peasant policies can be profitable. The lump sum paid to the company is tax free, and in the past, the cost of the premiums could also be written off. Press reports name Proctor & Gamble, AT&T, Walt Disney, Portland General Electric, and Nestlé as corporations carrying COLI policies on low-level workers. At one time, as many as one quarter of the Fortune 500 purchased such policies, covering as many as 5–6 million workers. However, fewer companies took out such insurance after the tax laws were tightened. Wal-Mart says it discontinued its program when the tax law changed and after it lost several lawsuits. Nonetheless, policies purchased earlier may still be in place at a number of firms. Rules on dead peasant policies vary between states. Some jurisdictions outlaw this type of insurance, requiring that companies demonstrate that they have an “insurable interest” (would suffer significant loss of income) in the individual covered by the policy. Others require that employees give their consent before such insurance can be put in force. Corporations defend their use of dead peasant policies by claiming that the insurance helps defray the expenses of providing benefits for executives and of providing health insurance for employees and retirees. Critics scoff at this explanation, noting that insurance payout monies are generally mingled with general revenue. They point out that taking out such policies without the knowledge or consent of employees is disrespectful and treats workers as resources, not as human beings. Such insurance also sets up a potentially deadly conflict of interest. Employers, who are in charge of safety, now have a financial stake in the early death of employees. As one surviving spouse asked, “What incentive is there for a safe work environment if companies can do this?” (Roesler, 2003).

Discussion Questions

1.Do you think it is ethical to insure top corporate leaders? What criteria should be used in determining who should be covered?

2.Would you agree to a company-owned insurance policy on your life if it was required for employment?

3.What would Immanuel Kant say about dead peasant policies?

4.Are dead peasant policies unjust?

5.Do you think that employers have a conflict of interest if they hold life insurance policies on their employees? Why or why not?

6.Are dead peasant policies ethical if (a) workers are notified of their existence; (b) if the proceeds go towards supporting employee benefits?

7.Would you support a total ban on dead peasant policies? Why or why not?

Case Study 4.4

A New work Ethic?

YOU WOULD THINK THAT EMPLOYEES WOULD do something if they discovered that a customer had died on the premises. But that’s not necessarily so, according to the Associated Press, which reported that police discovered the body of a trucker in a tractor trailer rig that had sat—with its engine running—in the parking lot of a fast-food restaurant for nine days. Employees swept the parking lot around the truck but ignored the situation for over a week until the stench got so bad that someone finally called the police. That lack of response doesn’t surprise James Sheehy, a human resources manager in Houston, who spent his summer vacation working undercover at a fast-food restaurant owned by a relative.78 Introduced to coworkers as a management trainee from another franchise location who was being brought in to learn the ropes, Sheehy was initially viewed with some suspicion, but by the third day the group had accepted him as just another employee. Sheehy started out as a maintenance person and gradually rotated through various cooking and cleaning assign- ments before ending up as a cashier behind the front counter. Most of Sheehy’s fellow employees were teenagers and col- lege students who were home for the summer and earning addi- tional spending money. Almost half came from upper-income families and the rest from middle-income neighborhoods. More than half were women, and a third were minorities. What Sheehy reports is a whole generation of workers with a frightening new work ethic: contempt for customers, indifference to quality and service, unrealistic expectations about the world of work, and a get-away-with-what-you-can attitude. Surveys show that employee theft is on the rise throughout the business world.79 Sheehy’s experience was in line with this. He writes that the basic work ethic at his place of employ- ment was a type of gamesmanship that focused on milking the place dry. Theft was rampant, and younger employees were subject to peer pressure to steal as a way of becoming part of the group. “It don’t mean nothing,” he says, was the basic rationale for dishonesty. “Getting on with getting mine” was another common phrase, as coworkers carefully avoided hard work or dragged out tasks like sweeping to avoid additional assignments.

All that customer service meant was getting rid of people as fast as possible and with the least possible effort. Sometimes, however, service was deliberately slowed or drive-through orders intentionally switched in order to cause customers to demand to see a manager. This was called “baiting the man,” or pur- posely trying to provoke a response from management. In fact, the general attitude toward managers was one of disdain and contempt. In the eyes of the employees, supervisors were only paper-pushing functionaries who got in the way. Sheehy’s coworkers rejected the very idea of hard work and long hours. “Scamming” was their ideal. Treated as a kind of art form and as an accepted way of doing business, scamming meant taking shortcuts or getting something done without much effort, usually by having someone else do it. “You only put in the time and effort for the big score” is how one fellow worker characterized the work ethic he shared with his peers. “You got to just cruise through the job stuff and wait to make the big score,” said another. “Then you can hustle. The office stuff is for buying time or paying for the groceries.” By contrast, they looked forward to working “at a real job where you don’t have to put up with hassles.” “Get out of school and you can leave this to the real dummies.” “Get an office and a computer and a secretary and you can scam your way through anything.” On the other hand, these young employees believed that most jobs were like the fast-food industry: automated, boring, undemanding and unsatisfying, and dominated by dif- ficult people. Still, they dreamed of an action-packed busi- ness world, an image shaped by a culture of video games and action movies. The college students in particular, reports Sheehy, believed that a no-holds-barred, trample-over-anybody, get-what-you-want approach is the necessary and glamorous road to success.

After reading Case 4.4 on page 181 in the text, answer the following question: How typical are the attitudes that Sheehy reports? Does his description of a new work ethic tally with your own experiences?

Tax savings are being passed down

President Trump signed the Tax Cuts and Jobs Acts into law on Dec. 22, 2017, reducing personal income taxes for most families for the next 10 years. Corporations, however, received much bigger and more permanent tax cuts with the new law reducing the corporate tax rate from 35% to 21% and reducing the tax on repatriated cash to 15.5%. The Congressional Budget Office estimates businesses will save about $320 billion in taxes over the next 10 years. The tax overhaul prompted hundreds of businesses to offer bonuses and pay raises to their workers and expand employee benefits. Here’s a selection of companies that have passed on some of their savings to their employees. 37.

Wells Fargo

Wells Fargo (NYSE: WFC) smartly avoided paying out bonuses to its employees in the wake of tax reform. The company has a murky history with employee bonuses. Instead, it increased the minimum wage to $15 per hour, pushing competing banks to do the same. It’s unclear whether that pay raise is linked to the tax cuts as Wells Fargo’s press team has issued conflicting reports. Wells Fargo is also planning to donate $400 million to nonprofits this year. Wells Fargo stands to benefit from the 14 percentage point decrease in the U.S. corporate tax rate more than most other companies. Nearly all of its operations take place in the U.S. As a result, its effective tax rate could fall to about 22% this year, according to Goldman Sachs analysts, down from 33% last year. That would result in about $3.7 billion in tax savings. Even with a $1 billion fine hanging over its head, Wells Fargo is making out quite well from tax reform.

Companies will still come out ahead

There are many more companies that offered wage increases, bonuses, and other employee benefits in the wake of tax reform. Over 400 companies have announced plans to pass on some of their savings to employees in some form, with 4 million-plus workers receiving over $4 billion in bonuses, according to the GOP. Corporations should still come out well ahead even after paying out employee bonuses. The corporate tax cuts are permanent, and most companies opted to pay a relatively small one-time bonus compared to the benefits they’ll see this year alone. It’s also unclear if the wage and benefits plan increases are more closely tied to the tax cuts or a booming job market where companies are forced to compete more aggressively for labor. American workers are seeing more money in their pockets this year, but they need to save that money because it’s likely a one-time bonus and the personal income tax cuts aren’t permanent. Adam Levy owns shares of Apple, Express Scripts, Lowe's, and Starbucks. The Motley Fool owns shares of and recommends Anheuser-Busch InBev NV, Apple, CarMax, Chipotle Mexican Grill, Mastercard, Starbucks, and Walt Disney. The Motley Fool owns shares of Verizon Communications and Visa and has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, short September 2018 $180 calls on Home Depot, and long January 2020 $110 calls on Home Depot. The Motley Fool recommends Aflac, Amerco, CVS Health, FedEx, Home Depot, JetBlue Airways, and Marriott International. The Motley Fool has a disclosure policy.

We see the headline that states unemployment is at the lowest rate in history, yet we seem to miss the news that many organizations are laying off large numbers of employees. This is a real time example of the hazards that result from poor or no workforce planning. Pick one of the companies mentioned in the slide show and do a bit more research on the situation surrounding the layoff plan and then answer your discussion question for this week.

- Write a one paragraph summary of whether or not you think that workforce planning could have avoided or minimized the layoffs at the company you selected from the list. Explain your answer.

- Write a second paragraph giving your view on whether or not effective workforce planning can create a more stable employment situation for the average worker in the US. This explanation should demonstrate your understanding of the HRP process.

Experiment 3: Charging by Contact and Induction
In this experiment, you will charge pith balls by contact and induction.

Materials
Electrostatics Kit
Masking Tape
Monofilament Line
Paperclip
Wooden Block with Slit     
*Metal Object (ex. Doorknob)

*You Must Provide  
  

Procedure
1.   Tear one small piece of masking tape from the roll (approximately 5 cm).
2.   Create a small, closed loop with the tape, leaving the sticky side on the outside of the loop.
3.   Secure the looped tape to one of a side of the wooden block adjacent to the side with the slit.
4.   Press the taped side of the wooden block onto a smooth wall (or the flat side of a counter or table top) with the slit pointing perpendicular to the wall and parallel to the floor.
5.   Unwrap the outer layer of a paperclip.
6.   Use the exposed end of the paperclip to poke a hole through the centers of two pith balls.
7.   Thread one end of the monofilament line through one of the pith balls. Tie a knot on the end that you threaded through to keep the pith ball on the thread.
Note: If the paperclip created a larger hole, three to five knots may need to be tied to secure the ball on the thread.
8.   Repeat Step 7 on the other end of the monofilament line with the other pith ball.
9.   Once the pith balls are secured on each end of the line, place the line in the slit of the wooden block. The pith balls should rest at the same height.
10.   Remove any charge from the acetate strip (wide and clear) by grabbing it with your hand or rubbing it on a metal object like a door knob. This is called grounding.
11.   Test for interactions between the acetate strip and both pith balls. Record observations of any interaction.
12.   Charge the acetate strip by rubbing it with the cotton cloth.
13.   Slowly bring the plastic strip close enough to the right pith ball so that it moves, but does not touch the plastic strip. Once movement of the pith ball is observed move the plastic strip away. Record your observations (e.g., how far away were the two objects, how fast did the pith ball move, in what direction did the pith ball move, etc.).
14.   Slowly bring the plastic strip close enough to the left pith ball so that it moves, but does not touch the plastic strip. Once movement of the pith ball is observed move the plastic strip away. Record your observations.
15.   Hold the monofilament line above the right pith ball and bring the ball into contact with the plastic strip.
16.   Let the pith ball hang again and bring the plastic rod close to, but without touching the right pith ball. What kind of interaction is observed? Record your observations in Post-Lab Question 3.
17.   Hold the line above the right pith ball and bring it close to the left pith ball. Observe what happens. Let the balls come into contact. How does that change the interaction?
18.   Grab the pith balls to ground them and take away any charge they may have.
19.   Charge the plastic rod again with the cotton.
20.   Hold the line above the right pith ball with your pointer and middle finger. Bring the right pith ball close to the plastic rod, but do not let them touch. This time touch the left side of the ball (the one opposite of the rod) with your thumb. Let the ball hang again. Bring the right pith ball close to the left pith ball. Observe what happens.
Observations

After step 10-14 we can see a movement off the balls in the direction of the plastic strip (after rubbing it with a cotton cloth). The balls moves as close as it can to the plastic strip (like 2-3 cm)
When we put the plastic strip close enough to the left pith ball it moves to the left

Step 16- they were attracted to each other (the ball and the plastic)
Step 17- the balls a little bit attracted to each other but not too much

Post-Lab Questions

1.   Explain why the pith balls were attracted to the charged plastic strip.

2.   State two observations that show the right pith ball was charged after it came into contact with the plastic rod.

3.   What did you observe as you performed Step 16? Use your results to explain what happened.

4.   Draw a diagram to show how Step 13 charged the right pith ball.

5.   What is the charge of each pith ball if they are attracted to each other? Explain your reasoning.

Read the following article, relating to monetary policy and inflation in Japan, and answer the following questions.

TOKYO (Kyodo) -- The Bank of Japan on Wednesday cut its inflation forecasts for the three years through March 2021, putting its elusive target of 2 percent price gains farther from reach.

As widely expected, the central bank's Policy Board also decided after a two-day meeting to keep interest rates at their current ultralow levels as risks including trade friction between the United States and China cast a pall over growth in the global economy.

Inflation during fiscal 2018 ending March is expected to be 0.8 percent, down from 0.9 percent predicted in October amid a decline in global oil prices, the board said in its quarterly economic outlook report.

Prices are expected to rise 0.9 percent in fiscal 2019, a significant downgrade from the earlier forecast of 1.4 percent. In fiscal 2020, prices will rise 1.4 percent, down from 1.5 percent, it said.

Governor Haruhiko Kuroda told a post-meeting press conference that despite the dip in inflation, momentum toward the 2 percent target remains intact.

"It's true that we believe it will take some time to achieve 2 percent. The BOJ will persistently continue its current accommodative policy," he said.

The delay in reaching the target, which the central bank has been pursuing since 2013, puts the BOJ in an exceedingly difficult position.

It could put pressure on its policymakers to roll out additional easing measures, even as the protraction of current stimulus draws criticism for side effects such as hurting the profits of commercial banks.

Kuroda said he is closely watching this year's labor negotiations expected to start next month for signs that wages will begin rising in line with a tightening job market, an outcome that would give businesses the confidence to hike product prices.

"Wage gains are still somewhat tepid compared to the improvement in the real economy, corporate profits and the labor market. We'll see how that changes."

The central bank also lowered its forecast for Japan's economic growth in fiscal 2018 to 0.9 percent from 1.4 percent. For the following two years, it slightly lifted its forecasts to 0.9 percent and 1.0 percent growth, respectively.

The board's first meeting of the year came days after the International Monetary Fund downgraded its forecast for global economic growth this year.

Kuroda acknowledged that the world economy is facing increased downside risks including the U.S.-China tariff war and Britain's troubled attempt to exit from the European Union.

"If the trade tensions continue, there will be severe consequences," he said.

The board voted 7-2 to continue applying a short-term policy rate of minus 0.1 percent and to keep long-term yields near zero percent, with board members Goshi Kataoka and Yutaka Harada dissenting.

It also retained a pledge to keep rates low "for an extended period of time" ahead of a hike in the consumption tax in October, which it is feared will trigger a fall in domestic demand, and made no changes to its purchases of risky assets such as exchange-traded funds.

Source: Mainichi.jp

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1. Australia’s short-term policy rate is called the cash rate. The cash rate has been held at 1.5% since 2016. Explain briefly the main mechanism used by the Reserve Bank of Australia to stabilise the cash rate. .
2. The Bank of Japan has used large scale quantitative easing in recent years. What does quantitative easing involve? How does the use of quantitative easing change the way a central bank controls its short-term policy rate? .
3. The article tells us that the Bank of Japan is continuing to apply a short term policy rate of minus 0.1%. How has it been possible for the Bank of Japan to reduce its policy interest rate below zero? What does a negative policy rate imply for private banks with reserve balances held at the Bank of Japan. .
4. What does the Japanese experience demonstrate about the impact on the rate of inflation of large scale quantitative easing? Identify two factors, mentioned in the article, which suggest inflation will remain below target during 2019. .
5. The Bank of Japan has chosen to hold the rate of interest (or yield) on long term (10-year) Japanese Government bonds close to 0%. How has the Bank of Japan been able to control the rate of interest on these bonds? What has the Bank done to hold the rate of interest on these bonds at zero? .