Economics (short answer questions) - Assignment Example

This is because many workers are unwilling to take pay cuts hence inflation helps to reduce the purchasing power of their paychecks. In the ‘Deck the Halls with Macro Follies’ video, two main ideas or arguments in relation to the growth of the economy are presented. First, it is argued that spending does not help grow the economy. Contrary to what many believe, excessive consumption does not contribute towards economic recovery. Secondly, in order for meaningful and sustained growth to be realized, there is need to delay consumption today and concentrate on saving.

This will help increase production which helps the economy to grow since growth is facilitated by supply. Too much spending is not good for the economy. In his book End this Depression now, Krugman argues that Europe’s ‘Big Delusion’ is the belief that the economic crisis in Europe was as a result of fiscal irresponsibility. It is the belief that countries operated on budget deficits and this go them into debt. As a result, the approach to dealing with the crisis has more or less been a moral one where countries are believed to have sinned.

Focus has been on this big delusion and little attention has been given to other evidence. The V Sauce video ‘How Much Money is there on Earth’ highlights a number of ideas related to money and world currencies. Two major things were learnt from the video. First, there is a lot of money kept by individuals as loose change. This money, if collected, can be put to good use. For example the loose change in America is estimated to be 15B dollars. In addition, I have learnt about the definitions of money on the planet: M0, M1, M2 and M3.

Secondly, I have learnt about the Tinkerbell effect. This is the belief that money is valuable, and this helps to attach meaning and value to FIAT money. The main objective of advertising is to sell. It helps to communicate information aimed at persuading consumers to buy. Companies decide to place an ad in the