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CH 18!!!

Re this chapter, currently as of this present moment and day, I found the debate over a balanced government budget to be the most important. After learning about what the Fed is doing to avoid a recession as a result of COVID-19, I Was astonished as to how much money they are injecting into th economy. While it seemed like there were efforts to decrease our goverment debt, it only seems like this action taken, in order to sustain liquidity, is largely increasing it. After the debate in this chapter, it really seems unfair to leave debts of today up to future generations to pay off. Although the spendature is likely done in order to create a better way of living in the future, it should not take 2.4 % of ones income and hard work to pay off the debts of the previous generation. It seems as though after the stimulus and government spending as well as the unlimited and open ended amounts of assistance are being offered, this debt is expected to add 11 trillion dollars to the debt. It argues in the book that it is not so bad that the future generation will reap the hardship of high and unbalanced government budget, because they sugest that parents just save the future generation a bequest ‘nice chunk of change’. I gues if you plan to have a kid this could be considered part of your resposibilty but at the same time I find that ridiculous... to justify the debts increasing with assuming our current generation can even afford to do that..... I beleive we shoudl abalnce the budget in some way to raise the national savings, capital, an din turn provide higher wages and standards of living. 

I am so so grateful to have taken this class. Although super overwhelming, (and probably the first textbook I have ever read cover to cover), it helped to me to connect with the real world. Especially in a time like today’s world, when we are currently struggling through a pandemic and beginning of a recession, experienced a presidential election, etc. I was able to follow along so much more and comprehend what is going on. I need to be involved in this type of matter and this class allowed me to begin walking that path. I think learning about the financial system and savings, investments, etc helped me begin to think of things in a different way. Although already pretty good with my money, it introduced me to ways to be even smarter with savings. Learning also about the cost of something is what you give up to get something else is a super crucial way to consider decision making, life choices, and even small daily purchases. My dad is super frugal and in times in my life in considered him a cheapskate, but this has reminded me how it is important to look a things in an aconomical standpoint. It opened my eyes to buying s!*t from walmart vs ethical and quality made goods. 

Thank you for being a cool professor, and opening my eyes to the world!

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CH 17 Reflection

The short-run trade off between unemployment and inflation is represented in Phillips curve. Phillips curve represents the negative relation ship between the two. This negative relationship is what causes the trade-off. When central banks take action, it can either benefit unemployment and worsen inflation or vice versa. Long-run trade-off cannot exist because monetary growth does not effect real quantity, such as unemployment and output. When money supply grows, the AD curve shifts to the right, putting an ew equilibrium of the AS curve, in turn raising the price level, but having no change in terms of the output. 

Short-run (and long-run) depend on expectations. Expected inflation is a given in the short-run. With that being said, the trade-off has been debated due to the way people expectations of inflations can be influenced. The battle between the idea of  the sacrifice ration vs. rational expectaions, show similary how people expectations influence the relationship of unemployment and inflation. What I found utterly confusing however, in the idea of rational expectaions, was the idea that government policy commitments influences people expectaions. It basically states that what people know, follow, and hear about influence how they might expect to see inflation rsie or fall. However, in the same breath the book states that people often do not believe what they hear. I think in today’s world this idea of rational expectations is so irrelevant. I do not think we should just bet on any policy declared to be in place. This is known as time inconsistency of policy”. It is a known fact that policy makers will say something to set the expectations of inflation to a desired expectation.  Changes in the aggregate demand curve have strong influences on the shift in phillips curve, and therefore the trade-off between these two quanitites. 

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CH16

Just my luck... the meat of the course is the chapter I least understand! Great!

From what I understand, I do know that stimulus checks were given out to help with economic impact of personal households. With that I assume that the supply of money had to be drastically increased by the Fed, which includes buying government bonds. I think with the greater amount of income received, that will encourage spending which requires more demand, and more employment. Seems contradicting to me in terms of preventing the spread of covid? 

The federal government seems to be debatable, given the state of our politics and the level of controversy and disagreement. Overall, we have not faced a complete shutdown. With that, the federal government is trying to keep businesses running and the economy functioning. This requires extra protection and care for those who have to work and those who are still going out to be consumers. This added personal protection equipment is raising a demand for the need for PPE equipment, which means it has to be produced. Additionally, travel restrictions and travel and trade advisories are in place. 

I think the two fiscal and monetary policies seem to be contradictory in the fact that they are claiming shutdowns and stay at home orders. However, I am finding a strong fight to avoid the shutdowns and stay at home orders to keep the economy running. I feel there is still impact in having limited occupancies, travel adviosries and restrictions, etc. It seems it would be better to do a full shut down for a short amount of time rather than limited options for longer amounts of time because people are still working, rtaveling, etc. 

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CH 15 Reflection

A decrease in both aggregate supply and aggregate demand, would result in similar price levels, but lower quantities of output. Typically when the SRAS is shifted to the left, price levels rise however the pice level is balanced by the leftward shift of the SRAD. Long run affects of a shift in SRAD does not affect output. However with the combination of a leftward shift of SRAS, the new l.r. equilibrium will remain the same for level of price but will have resulted in lower output. 

I’m not really sure what the question is asking? It is hard to understand the affects of both a SRAS and SRAD together.... 

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CH 14 Reflection

This one was tough, but from my understanding, Trump wants to decrease our trade deficit by implementing a tarrif on imports with China?? This article https://www.nytimes.com/2019/10/17/opinion/unpacking-the-trade-deficit.html by Steven Rattner, is explaning how this is not good. This is becaue Trump is only viewing one of the supply and demand markets. His views are only taking in account for the market of loanable funds. Just as important is the market for foregin currency exchange. In order to reach a balanced trade, you have to take into consider all aspects of the supply and demand markets. I cannot really understand whether he is with Trump or against him? One thing I do understand and agree with the author on, is the impact on American jobs. While technology will absolutely take away many jobs that manufacture goods, having them manufactured abroad for cheaper takes away many jobs, even though it is providing the whole of America cheaper prices on the goods. What is worse? OR what is better? Im honestly really confused by this article maybe I should have chose a different one....

Capital flight is what determines the relationship between trade surplus/deficit to the movement of capital, or capital flow. When capital flight occurs, the demand for foregin assests in one specific area decreases, but increases the demand in the market for loanable funds (elsewhere). This increase eventually moves the capital flow, in this case upward, and in turn deppreciates the original countries currency, and results in a trade surplus. 

As mentioned above, if Canada becomes unstable, people will want to withdraw their assests from there and will increase the capital flow. This decreases the capital flow of the US. The interest rates in the US will in turn lower, because the US dollar will appreciate as a result of the CAD deppreciated due to the increased interest rate because of the increased demand for loanable funds in canada. 

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CH 13

I hate to admit this, due to the reasons related to the pandemic (I was really careful) but I was reading this chapter and completing ch 13 homework while traveling internationally. As a result, section 13-2 about exchange rates caught my attention. I found it interesting to learn about the exchange rate and why it matters and also why it even exists as well as its importance towards trade. Also it was interesting to hear the names of currency in other countries. I.E. the Italian lira, the European euro, the Japanese yen, etc. 

The idea regarding arbitrage was interesting to me. It reminded me of thrift shopping, and then reselling what you get at a lower price, at a higher price. I am not sure if that is an exact example of arbitrage but I wonder if it is necessarily a good or bad thing?

I found it intersting to think about life before technology. I often think about this, even in the simplest of things such as, if you wanted to hangout with a friend, you had to just go on over to their house and knock on the door! It was interesting to think about trade and all things economic before the ability to transport goods, the use of telecommunications, etc. The fact taht we can ship food from door to door is even an amazing example of how succesfully we can trasnport goods. 

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CH 12 Reflection

Menu costs and shoeleather costs. 

Shoeleather costs represent the watedresources that occur when we try to keep our inflation taxes low and our value of money high. Menu costs is probably more relevant because we do not experience extremely high levels of inflation. 

Deflation may sound ideal, and it may be for some. This would be because the cost of holding money is lwoer, therefore the incentive to save is higher However, one example of who may be affected by deflation would be farmers back when farming was not controlled my machines and GMO’s. This is because farmers relied heavily on those keepngi them out of debt, when deflation occurs, it hurts the poor and benefits the wealth, therefore making the result of deflation more harsh. I agree that deflation can be more harmful than inflation because I think it is unfair how there is such a small percentage of super super wealthy people who have so much control over the rest of society. Anything that hurts those who are less economically stable is more impactful than something that will hurt those who are higher on the economic totem pole. 

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CH 11 Reflection

Cash (currency) is only half way important to the money supply. Matter of fact, maybe even less than. The other addition to counting and knowing the economie’s money supply is the form of money known as ‘demand deposits’. Especially in today’s world, demand deposits are taking over the form of currency and are typically more widely used. This contribution to money supply include checks, or debit cards. The creation of banks and the contirbution to loans and assests are soley reliant on demand deposits, therefore the cash currency side of money supply is probably less influental than the demand deposits. 

The FRB is ran by members of the Board of Governors. Meaning, the FRB functions through federal government control (i.e The President, Senate) The people who make decisions within the FRB are known as the Federal Open Market Committee. Open-market operations is how the Fed control the money supply. If the money supply needs ot increased, they will preform an open market purchase of government bonds in order ot increase the overall money supply. 

I am unsure of how ‘reccent’ the questoin might be referring to. I am unsure of what the most recent change in the money supply was. I am ssuming it might have something ot do with COVID-19 and maybe the stimulus checks that are being distributed. This would probably mean they bought a government bond in order to increase the money supply to be dispersed???????

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CH 9 Reflection

People face trade-offs. This is true for balancing risk and return. The obvious answer in balancing the two is through a fundamental analysis. Utilizing our resources is a good way to ensure you are balancing the risk vs return. However there are more thigns to consider such as present and future value of money, interest rates, etc. than just the focus on stock portfolio investements.  This balance is also obviously dependent on each persons personal preferences as well. Even attending school with student loans brings up consideration towards the tradeoff between risk and return. This is where it becomes valuable to asses your ROI (Return on Investment) when considering the cost of attendance vs the outcome 

Personally, I have not yet decided on a degree or career path. Additionally, as someone who is not taking the traditional route for college, I am unsure of the cost of attendance for my complete education. I plan to just finish an associates at CMC. However, I could assume that I will be attending CMC for my four year degree. (I know the variables can be adjusted but I have no idea where I will transfer to therefore unsure of the cost of attendance)

I have always been super against student loans of any kind, but as I approach the bachelors portion of my degree I amfinding that it will not always be as cheap as CMC. Therefore it will be important to assess the cost of school and the return. Comparatively, average earnings of someone with a bachelors degree equates to $64,896 vs no degree equating to $38,792. Granted you must account for the cost of education and its value of loans later in the future. 

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Ch 10 reflection...

There are four main resons behind why unemployment will always occur naturally... Frictional unemployment is the morevlikely cause of short-term unemployment however it is inevitable due to the economy always changing. The other 3 reasons result in structural unemployment and are caused by the comparison of number of jobs available vs number of people who need a job. Minimum wage laws, unions, and efficiency wages all are a cause of structural unemployment which can always occur. 

An example of public policy that effects unemployment would be unemployment insurance. 

This is an incentive for people to not work for the most part. Unemployment insurance typically provides those facing job loss 50% of their former wages for up to 26 weeks. It seems as though you would expect it to protect those who are temporarily unemployed, however most people respond to this as an incentive and take advantage of the funds for as long as possible, resulting in longer spell of unemployment. Overall, this is a negative result in unemployment and just directs people to abuse this policy. 

I have personally known so many people who are ‘riding this wave of unemployment’ The additional financial supprt in light of the pandemic seems like a necessary and helpful stipend. I am sure it has dramatically helped so many people in their experiences with job loss however, it shares similarity to the unemployment insurance policy. This extra money is seen as an incentive if you will, and people are utilizing this extra money to remain unemployed yet still reaping the benefits of an income.... In terms of the economic standpoint, it is hard for me to say whther this is a good idea. I have a hard time understanding where all this money is coming from and how it is going to affect us in the long run. 

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Ch 8. Feelin great. Reflecting...

This chapter is an important link in how we understand government policies today in the midst of the Covid-19 crisis. The Federal government is running record deficits in an attempt to avert or minimize a recession/depression.  Look back at this chapter and discuss how this should affect the market for loanable funds.  Is that what we have seen happen (where is the equilibrium interest rate now - up or down?)  You should be left with a question - why have interest rates not increased?  

When the government is running budget deficit, national savings declines. Savings is what provides the source of supply for the market for loanable funds. This means the supply of loanable funds decreases. When the supply decreases, and shifts to the left, this causes interest rates to rise above the equilibrium rate. Although this is typical , perhaps we have not seen interest rates rise because the investment rates are beginning to decline as well? Or at least they are not increasing because the demand to invest is not currently booming due to the uncertainties of job stability, etc.?

How does the loanable funds market help define/choose which investment projects are funded each year?

Investment incentives will increase the demand for the market for loanable funds. The desire to invest will be more desirable upon investment incentives and projects. When the demand increases, so does the supply which inturn increases the interest rate as well. 

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CH 7!!

One factor that is a determinant of productivity is human capital. This factor is crucial in order to create productivity. Human capital is the knowledge and training in which a human acquires in order to sucessfully and productively produce. The more educated a person is, the more aware they are of general connections and functionalities within the world and the economy, therefore their productivity levels are bound to be higher because they are able to contribute more. They are able to contribute their education towards inventions and through knowledge as a public good. If the government provides better education, they will reap the benefits by providing the input needed for human capital to be able to successfully produce goods and services that will in turn raise the GDP growth.

 The same goes for health and nutrition. Human capital is succesful through the gain of knowledge as well as nutrition and healthy practices. If a human is nourishing the body with things that allow them to function at their best and most full capacity, then the result is beneficial. They can function at a higher capacity and in turn produce more and most likely at a more convenient rate. This could be seen as a positive externality. The person is not only taking care of their health and feeling better in turn, but is also able to produce and preform better therefore benefiting the society as well as the country they are native to, because they are increasing their productivity. Why is it that those two things are some of the most constly expenses in one’s life. Why is it easy to be turned away from indulging in education and health because of it’s high cost?

Population growth is a term that scares me. It is really hard to fathom how many people are not only in this country but on this earth. My mind is blown by the amount of trash that only my place of work produces, let alone every other person’s place of work and their homes as well.... The disadvantages of population growth include the fact that when there are more people to produce and work, then the capital needed to do so is spread out more widely, therefore each person will receive les and less with population growth, inorder to evenly distribute the capital. In addition there is the obvious concern of running out of resources, and destroying the environment with the amount of consumption that takes place with an increasing population. However, there is the idea that growing population and larger populations are the reason for technilogical success and progress. The more people there are, the more people there are who can become educated and use that to invent, learn, educate, etc and contirbute positively to expanding society. 

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Reflecting on Ch 6....

Go back to the section in the chapter on the problems with the CPI.  How serious are they? Why does it matter if we get the CPI wrong? -----------------The CPI determines how much the income must rise in otder to maintain a stard of living. It is the most widely used measurement of U.S. inflation. With that being said, it is important these measurements are precisely acurate, to ensure the population is able to live above poverty. In addition, and accurate CPI is important to determine the correct amount of government spending. I belive this is what helps keep a nation out of poverty and it helps to maintain a high standard of living. If this measurement is unaccurate, there can be discrepancies in income adjustments and can quite largely effect our economy and well-being as a whole. Most of you live in rural areas.  Is the inflation rate you face different than that of urban areas? Why or why not? ------------------------------------------------------Yes, the inflation rate in a rural area is going to be cacluated to be different than that in an urban area. This is because of the classifcation of CPI into two different categores known as CPI-U and CPI-W. The market basket will de different between the two areas based on the availability of goods and services as well as the different classification in which expenditures are included. Are all of those uses appropriate? Is the accuracy of the CPI more important for some uses than for others?------------------------------------------------------------Given the fact that we have identified problems in the CPI due to the fact it can be miscalculated, no these may not all be appropriate at all times. If we are caluclating over-inflation, it would be important not to be providing higher income to lower wage families, if not necessary. In addition, if the CPI is being miscalculated, then it could greatly affect the value of the dollar. The purchasing power declines as prices increase, therefore measuring deflation may not be appropriate if we can anticipate an inaccurate measurement of rising prices. 

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Ch 5 reflection

Question: What unit of measurement is used to determine GDP? Is there one specific way to measure GDP?

Answer: We know that GDP is a measure of total expenditure, however the measurement of GDP falls into many different categories. One measurement specifically, is the final product in which measures GDP. The difference between the intermediate good and the final good, is one measurement of GDP. Specifically, we use GNP, NNP, national income, personal income, and disposable personal income to help equate or measure the GDP.

Current Events: I would say that social distancing has had an effect on the way we measure GDP. The efforts that are being taken in order to social distance and keep yourself and everyone safe, are an example of increased output, but not in the sense that GDP is accounting for. However, it should be considered, given the fact that staying home and social distancing has become more valuable and important than working and producing. This also somewhat touches into the question of whether GDP is a good measure of economic well being.

Currently, the United States is at a level of $19.41. According to the BEA, the GDP has decreased at a rate of 31.7% in Q2. The shrinking rate could mean a recession. A recession is defined by a falling GDP for two conescutive quarters. A recession means an un healthier economy, higher unemployment, falling profits, and more bankruptcies. 

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Ch 4 Reflecting....

DOES UBER AND LYFT AFFECT THE PRICES AND SUPPLY OF TAXIS?

 Supply and demand rely on the market and competition of a certain good or service. Yes, Uber and Lyft are affecting the quantity demanded and therefore the quantity supplied of taxis. With buyers directing their consumption towards something similar but more appealing than the taxi, there becomes a decrease in demand for taxis. The number of buyers of taxis will shift the demand curve. Without the income made from the product, the product cannot be made, therefore the demand in supply is also affected and will decrease. 

DOES INCREASING MINIMUM WAGE AFFECT THE DEMAND OF LABOR AND THE SUPPLY OF LABOR?

 As anticipated, when the minimum wage amount is increased, labor workers will want to work more because they will receive more money, therefore the quantity of demand for labor will increase. (However I am slightly unsure of that because I can also justify the thought that when minimum wage is increased, the qunaitity demanded for labor will decrease because people can make more moey is less amount of time spend comleting labor, Therefore there would be a decrease in demand.) I think when higher wages occur, the demand for labor increases because people have money to spend on buying more. Thereofre, the supply of goods needs to increase which means the supply of labor would increase also? Im not sure, this one seems to work both ways..... 

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Chapter 3..... Interdependence and the gains from trade

What surprised you most about the concepts in this chapter?  Why? It was suprising to learn about the details behind what agian, is common every day to day living. It took me reading through the chapter twice to really start to undertand the concept, but afterwards I found it very impressive at the simplicty yet at the same time the complexity of such equations and what determines one’s benefits from trading. 

What is your opinion about international trade?  Overall is it good or bad?  Why? After only have read 3 chapters in this book, a well as watching the short video about buying locally, I have come to understand that it is highly necessary and beneficial. I stil am unsure of a lot of the details that have not been discussed in the book, such as what it is like for workers who are pworking internationally, cost comparisons, etc. With that it is hard to determine my true opinion. However I think it is good and necessary, because it provides variety. With variety we learn more and it is a recipie for materialized satisfaction and overall hapiness. 

Did your opinion about trade change after reading the chapter? Go back to your thoughts on the buy local movement in your last reflection.  Can we think about trade with China and trade with Wyoming in the same way? Why or why not?  Yes my opinion did change. We simply cannot be dependent on our own goods and products if we do not want variety and do not want access to all of the things we are provided. It comes down to climate and geography that makes international trade benefical. This is because they have the ability to specialize in different products that we or Wyoming cannot. Without international trade, I think we do not realize how lost we would really be. 

Give an example of a recent purchase you made that was primarily produced overseas.  Was there a locally produced option? How much more would you be willing to pay for the locally produced option? Why?  If you did pay more, was there a trade-off? My mountain bike was the first example that came to mind. I am not sure that bike maufactureres even bother with producing the whole bike in the US. I know a lot fo companies that are proud to advertise their product was DESIGNED in the us, however you can see in fine print below that it was in fact mucatured elsewhere overseas. I do not think I would have paid more for a local option because by purchasing my bike, I was supporting workers and providing jobs to people all over the world. I think that is cool and would not have wanted to pay more for something with the label of having been made in the USA

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Chapter 2 reflection...

The buy local movement is fairly strong in Colorado.  How can you think about it in terms of the Production Possibilities Frontier?   How do his arguments relate to economic efficiency? How is efficiency shown on the PPF?

This was a thought provoking video. I do feel like this was only one of many possible coverages and opinions on buying locally. This did change my perspective on how beneficial buying locally really is, however, there have to be some positives, hence the movement to ‘buy local’.....

First off, he states that usually, local product really is not so local. This is the first point of the relation to ppf. If you are buying local, that means you are consuming only products that are resourced from that particular area. Alot of the money in our own local communities really comes from outside communites. As he states, that would very much so limit variety. Your resources and factors of production are not being distributed or utilized evenly, therefore causing a factor of inefficiency. It would not be the best way to ensure efficiency. If you are only using your local resources and local factors of production, you are probably not utilizing the fullest potential of both the resource and the abilities of the factors of production. You are shrinking the global specialization, and therefore lowering peoples productivity. When the market gros, yso does the frontier of ppf.