Economic Growth and Productivity - Assignment Example

Macroeconomics Assignments & Discussions Assignment 1. Factors that shift the PPC outward during WWII A number of factors during WWII contributed to the shifting of PPC outwards during the period. For example, one of the major factors was the increased production of war machinery such as the manufacture of aircraft and ships, guns and artillery. The other important factors included the increased federal government spending and the rising industrial production figure. 2. How the factors pushed PPC outward Although the United States was experiencing the Great depression at the beginning of the war and had one of the highest protective tariffs, the increased federal government spending, increased production of war machinery and the rising industrial production figure all shifted the curve outwards as the new factories and machines increased productive capacity. Assignment# 2: News Article Review I Title: “Why Is the Economy Still Weak? Blame These Five Sectors” Date: August 4, 2014 Author: Neil Irwin  Page: 1 Publisher & Copyright: New York Times Web Address: http://www.nytimes.com/2014/08/05/upshot/why-is-the-economy-still-weak-blame-these-five-sectors.html?abt=0002&abg=1 Summary of the Article The article investigates some of the potential the current American GDP and why the economy still keeps on underperforming. According to the author, the continued underperformance of the economy may be attributed to the less than expected performance of the five main sectors namely the housing, consumption of durable goods, business equipment investment and Federal government spending. Learning outcome related to the Article The learning outcomes related to the article include how GDP is measured & identify its components and Identification of one the five major social accounts and its impact on the economy. How the Article Relates to the Learning Outcomes The article explains that the health of the economy depends on the performance of the five GDP components mainly housing, personal consumption expenditures, business investment, government expenditures; and net exports. My Critique of the Article In my opinion, although the article clearly explains the GDP as well as the cause of the continued economic underperformance, the author has failed to highlight some of the reasons that could explain why the five main sectors are holding back the economy. Assignment# 3 Tourism is important to South Florida because it is one of the main source of revenue for the state, with approximately 67$ billion in tourism revenues being pumped into florida economy each year. In addition, tourism also impacts on the aggregate demand and supply in the state in a number of ways such as by soaring up investments related to tourism such as building of hotels and transport systems among others. This consequently has a multiplier effect on the economy including creation of job opportunities and improved economic growth. Generally, Florida is currently a top tourist destination attracting both local and international tourists due to its abundant nature’s wealth, such as sun, fine sand beaches and good luxury hotels. Assignment#4: News Article Review II Title: “Paying Off for Consumers: How the Consumer Financial Protection Bureau is Getting the Job Done” Date: July 24, 2014 Author: Rebecca Thiess Publisher & Copyright: U.S. News Web Address: http://www.usnews.com/opinion/economic-intelligence/2014/07/24/four-years-after-dodd-frank-the-cfpb-is-paying-off Brief Summary of the Article The article critically highlights some of the actions which have been undertaken by the Consumer Financial Protection Bureau that was recently constituted in order to ensure the financial safety of consumers in the face of increasing deceptive practices in the financial marketplace many of which were fueled by the 2008 economic meltdown. For example, card companies are going to provide funds to refund consumers who had been cheated. The other important actions by the Consumer Financial Protection Bureau mentioned include directing mortgage companies to limit their charges and establishment of a consumer complaint database. Learning Outcomes   The learning outcomes related to this article include Fiscal policies for supply and demand side and evaluation of the comparative effectiveness of monetary and fiscal policy alternatives. How the Article Relates to the Learning Outcomes The article particularly relates to the above highlighted learning outcomes in that the mentioned policies including the establishment of the Consumer Financial Protection Bureau were largely based on the recent financial crisis of 2008 and the problems of consumers who must be protected and should feel secure in the face of mounting financial scams in the market. My Critique The article has fairly elaborated the policies for supply and demand side recent financial crisis as well as the alternatives that can be used to ensure the protection of consumers. However, the article has failed to include some of the potential demerits of such policies. Assignment# 5: Inflation & Deflation The difference between demand-pull inflation and cost-push inflation is that demand pull inflation is the increased price of an item when the demand is higher than production while cost-push inflation is when the price increases due to the increased cost of production. Cost push inflation is worst because unlike demand pull inflation that raise the real GDP, cost-push inflation normally lowers GDP thereby resulting in increased unemployment rates. Finally, deflation refers to a general reduction in the prices of goods due to reduced supply of money or credit. In my opinion, deflation is worse than inflation because the falling prices may result in lower revenue and reduced profit margins thereby leading to pay cuts, layoffs and increased unemployment. Assignment# 6: Economic Growth 1. Philippines’ challenges for Economic Development Some of the major challenges for economic development in Philippines include rampant poverty, social inequality, poor political leadership, corruption and high population growth rates. 2. Population growth and Philippines Economic Development The high population growth in Philippines is detrimental to the country’s economic development. This is because of the increasing number of families as well as a growing young population has resulted in high dependency ratio thereby leading to rising unemployment and food shortages among others. 3. Keys to economic development for the Philippines Technology has helped the economy, Overseas Filipino workers (OFW) have contributed to economic growth. Remittances from overseas Filipino workers have exceeded$7 billion Assignment# 7: Quantitative Easing Quantitative easing refers to an unconventional monetary policy whereby the central bank usually attempt to increase money supply through purchases of government securities in the market. Although this policy has assisted the US in moving out of the Great recession, the Federal Reserve plan is planning to ease up on this policy gradually because of its double effect of creating asset bubble. However, the low rated have generally help much of the American society. Discussion# 1: Rent Control 1. Rent control has a number of pros and cons. For example, some of the pros include lower rent for tenants and stable communities as tenants are motivated to remain in their apartments. On the other hand, the cons include scarcity of affordable housing, reduced choice, and decreased returns for landlords. 2. Although rent control is often an effort by the government to cur the increasing housing costs, I would prefer to have the freedom and equal opportunity of bidding for my own space. 3. Rent control may create artificial shortages of houses hereby leading to scarcity in the housing market. On the other hand, the tenants already in may have excess space leading to wastage. 4. With regard to economic and non economic functions of government, rent control may impact on other non-market functions of the government. 5. Spillovers refer to secondary events that occur as a result of an unrelated primary event. Spillovers may impact on resource allocation by influencing supply and demand such as leading to excess demand. This can be controlled by limiting non market controls. Discussion# 2: How accurate is the GDP? 1. Gross domestic product (GDP) has a number of components (both income and production versions) some of which may include personal consumption expenditure, government spending, business investment as well as the next export of goods and services. 2. Some of the shortcomings of the GDP include the fact that id does not take into account the non market transactions such as the black markets. GDP is also an inadequate measure of social well-being, and that we lack an adequate alternative. 3. GDP tends to be overstated because it often excludes the value of leisure, non Market transactions and services such as gambling, smuggling and drug dealing among others. Discussion# 3: Conspicuous Spending Conspicuous consumption is for real and is not just a people’s rational response to higher income. This is because it takes place in virtually all income segments including among the lower income earners. Conspicuous spending affects consumption curves by making the slope positive depending on the degree of elasticity. Finally, it is particularly related to GDP in that it often pushes the GDP towards consumption. In addition, Conspicuous consumption can also drive the imports up and the GDP down if a status symbol is attached to some foreign goods. Discussion #4 The Great Recession happened in 2007 up to 2009 and the president of the United States had little power to bring it back on its right course. Americans borrowed more through home mortgages until it could not be sustained, and so the debt burden started to be unbearable in December 2007. Financial institutions panicked and withdrew funds from one another. The panic was then controlled when monetary and fiscal authorities issued emergency measures. The banking crises became a long one. Discussion 5: Can stagflation happen again? Stagflation is a state of the economy wherein there is high unemployment and the prices of prime commodities are high and also inflation. Stagflation will happen again because we are not in control of the economic situation. There are many factors that are out of our control. In the 1970s, oil prices went up, triggering inflation and high prices of primary commodities. The banking sector during the 2007 to 2009 financial crisis was affected. We can conclude then that stagflation will happen again in the future. Discussion# 6: Economic Growth and Productivity Economic growth and productivity can be attained if the means for production are provided and are at easy reach. Take for example, agriculture. Around the world, women are mostly enjoyed in the agriculture sector. But these women cannot produce the food we need because they do not have enough access to the requirements for good agriculture, such as “land, seeds, water, credit and markets”. We have to provide the agriculture needs so that there will be increase in production and more people would be saved from poverty and lack of food. Read More