In the government there are certain departments that have more freedom than others. The Board of Governors can have a term that goes up to fourteen years which is more than anyother section of the government. That gives the members of the Board of Governors the most freedom for any representative in the United States. This brings up the question, if these members have such freedom, should the public vote for the people to represent the Board of Governors.
For this freedom to be shifted to the people, there will have pros and also have cons. One pro of this is that the public will be in favor of the representatives that are elected. The members that are elected will be chosen because of the public has chosen these people to run this board. This will mean that the public should not attack these representatives or bad mouth them because it the majorities decision to have them be part of the board. Another positive of the public voting on who should be representatives is that the consumer confidence will increase because a member of the FED has been elected by the power of the people. This will cause the people to be happy with hte goverment causing, demand to increase and quantity to also rise. With all this occuring the economy will rise as a monetary fiscal policy will be put into the systems of the economy.
With the positives of the public voting on representatives, there will also be negatives that go along with them. One negative of the public voting is that these days, voting numbers are at a record low and the majority of the number that do vote don't put enough time into focusing on who they vote for. With members that are elected from votes that aren't really true can result in the government becoming careless and policies will be made. Another negative is that with the election of non qualified representatives, the economy will decrease due to bad policies that will make the U.S. money fall. Policies that are used in the wrong way can result in a bad economy and a recession will follow.
Tuesday, November 27, 2007
Sunday, November 25, 2007
Response to Question: What are the best goals for the FED? Should it lean toward restraint or toward expansion?
In the economy, many questions are asked on what the U.S. should do to have an economic growth. Economists argue back and forth on the topic of what will expand the economy and what will make it go into a recession. Some economists believe that restraint will lead to monetary expansion and that was evident in January 2001 when the Fed lowered it's rate from 6.5 to 3.5 percent. Other economists believe that expansion and not holding back will lead to an increase in the grow of the economy. In this case, interest rates were increased which caused costs to rise and will result in an expansion.
The side that has the stronger case is the restraint because it focuses on the present rate of the economy and not what canh happen in six months. When lowering the Fred Funds Rate, the costs decrease and the cost of living declines too causing price to go down. When there is a restaint occuring it steadies out the economy as the costs decrease and production increases and a high stress economy is an after thought. The average fed funds rate in January was almost 6 percent, well above many market interest rates, while the Treasury's 30-year bond was just 5.5 percent, and all bonds with shorter maturities were even lower. This means that banks cannot borrow Fed funds and relend them with a profit; causing monetary policy to be unavoidable. At this point monetary policy finally became expansive, and the money supply began growing. The strategy to lower the fed funds rate and have a restraint causes a monetary expansion and the economy grows.
The side that has the stronger case is the restraint because it focuses on the present rate of the economy and not what canh happen in six months. When lowering the Fred Funds Rate, the costs decrease and the cost of living declines too causing price to go down. When there is a restaint occuring it steadies out the economy as the costs decrease and production increases and a high stress economy is an after thought. The average fed funds rate in January was almost 6 percent, well above many market interest rates, while the Treasury's 30-year bond was just 5.5 percent, and all bonds with shorter maturities were even lower. This means that banks cannot borrow Fed funds and relend them with a profit; causing monetary policy to be unavoidable. At this point monetary policy finally became expansive, and the money supply began growing. The strategy to lower the fed funds rate and have a restraint causes a monetary expansion and the economy grows.
Wednesday, November 14, 2007
Week Nov. 12- Nov. 19 Assignment 2 Inflation
1) The inflation of the U.S. is a key piece to determine important economic strategies. For the past 20 years the inflation rate has increased at a steady pace. The production price index since 1980 has increased at an even keal as for every ten years, the price index increases at about 25. For the CPI it is a different story as there is less inlfation as the prices since 1980 has decreased at an uneven rate. So for the PPI and the CPI, there is no pattern as for the past 20 years, each price index has either decreased or increased with the same slopes. The PPI has stayed at a positive slope and the CPI has stayed at a negative slope.
2) When the price indexes are different and the slope of each line is the opposite, there are certain factors that have caused this occurance. This difference in the price indexes is caused by the consumer demand for a time period of when the prices are either falling or rising. Supply and demand are constantly changing which causes the price indexes and yearly numbers to never be at a constant rate. This has happened over the past 20 years and has caused inflation to be different as the factors of demand and production has made this occurance happen.
3) The price index that I would want to have to adjust my wages and salary is the Production Price Index. I would pick this price index because over the past 20 years, this price index has increased every ten years and as the demand for good increases, then the production will also. With increasing price index, my wages and salary will also increase as the nation's income with rise.
4) With the situation of adjusting my employees wages and salary, I would choose the production price index. PPI would be my choice because consumers affect demand and when demand is low then prices decrease causing more consuming and more production. When this happens, there will be more money to circulate will make wages increase and more demand for jobs. Also this will cause more output and more production causing the income to rise.
2) When the price indexes are different and the slope of each line is the opposite, there are certain factors that have caused this occurance. This difference in the price indexes is caused by the consumer demand for a time period of when the prices are either falling or rising. Supply and demand are constantly changing which causes the price indexes and yearly numbers to never be at a constant rate. This has happened over the past 20 years and has caused inflation to be different as the factors of demand and production has made this occurance happen.
3) The price index that I would want to have to adjust my wages and salary is the Production Price Index. I would pick this price index because over the past 20 years, this price index has increased every ten years and as the demand for good increases, then the production will also. With increasing price index, my wages and salary will also increase as the nation's income with rise.
4) With the situation of adjusting my employees wages and salary, I would choose the production price index. PPI would be my choice because consumers affect demand and when demand is low then prices decrease causing more consuming and more production. When this happens, there will be more money to circulate will make wages increase and more demand for jobs. Also this will cause more output and more production causing the income to rise.
Tuesday, November 13, 2007
In order to complete this independent study...
Hi, Drew: Now after carefully planning and selection, I posted 14 additional questions for you to contemplate and analyze and answer. They cover a wide span of economic topics, such as demand and supply, PPF, choice, positive and negative externalities (market failure), inflation, unemployment, GDP, inflation, business cycles, fiscal policies, budget and deficit, money and banks, the Fed and monetory policies. If you can satisfactorily answer all of those question before Dec 19, I think you will get a good and complete grade for this course. Otherwise I have to give you a Incomplete grade and let you continue working on them. I just want to make sure you learn enough from this course.
Good luck!
P.S. If you have trouble with the questions, remember you are not alone. I am here ot help. Please feel free to discuss them with me.
Good luck!
P.S. If you have trouble with the questions, remember you are not alone. I am here ot help. Please feel free to discuss them with me.
What are the best goals for the FED? Shout it lean toward restraint or toward expansion?
Policy advisors differ in their advice to the US Federal Reserve Board. Should the Fed be more concerned about inflation, or should it be more concerned about jobs and economic growth in the short run?
For a summary of these two sides go to:
The National Center for Policy Analysis for a description of the dangers of an expansionary monetary policy (“restraint is better”). http://www.ncpa.org/pd/economy/econ6.html
The Financial Markets Center for a description of the costs of a restrictive monetary policy (“expansion is better”). http://www.fmcenter.org/fmc_superpage.asp?ID=127
What are the weak points in the argument on each side?
Overall, which side makes the strongest case?
For a summary of these two sides go to:
The National Center for Policy Analysis for a description of the dangers of an expansionary monetary policy (“restraint is better”). http://www.ncpa.org/pd/economy/econ6.html
The Financial Markets Center for a description of the costs of a restrictive monetary policy (“expansion is better”). http://www.fmcenter.org/fmc_superpage.asp?ID=127
What are the weak points in the argument on each side?
Overall, which side makes the strongest case?
Should the FED be independent?
As chapter 14 points out, the Federal Reserve System has a large measure of political independence. The Board of Governors, appointed by the US president and confirmed by the US Senate, serve 14 year terms. In addition, the Federal Open Market Committee includes representatives of private banks in the Federal Reserve system.
Proposed: The public should directly elect some of the representatives who make monetary policy (as the public elects representatives who make fiscal policy)
Identify two strong arguments in favor this proposal.
Identify two strong arguments against this proposal.
Proposed: The public should directly elect some of the representatives who make monetary policy (as the public elects representatives who make fiscal policy)
Identify two strong arguments in favor this proposal.
Identify two strong arguments against this proposal.
The Future of Money and Banking
Imagine you come back to your economics class in the year 2050. How will the textbook describe money and banking? Based on trends you see today, make a prediction for the future of money. Explain why you think this trend will occur and how it will affect the US economy.
For information on the currency now in circulation go to:
http://research.stlouisfed.org/fred2/series/currcir
and the US Department of Treasury “frequently asked questions” at:
http://www.ustreas.gov/education/faq/currency/index.html
For information on electronic transactions see:
http://www.moneypage.com/emoney/
For current regulation of electronic funds transfer see:
http://www.federalreserve.gov/pubs/consumerhdbk/electronic.htm
For information on the currency now in circulation go to:
http://research.stlouisfed.org/fred2/series/currcir
and the US Department of Treasury “frequently asked questions” at:
http://www.ustreas.gov/education/faq/currency/index.html
For information on electronic transactions see:
http://www.moneypage.com/emoney/
For current regulation of electronic funds transfer see:
http://www.federalreserve.gov/pubs/consumerhdbk/electronic.htm
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