Quiz 4; Social Responsibility
Macroeconomics has furthered my understanding for informed citizens. Individuals in power, whether it be the president, the senate, the house or the Federal Reserve, hold a great deal of power in this nation economically speaking. The state of the nation’s and world’s economy affects everyone, multibillionaires to the lower middle class. It is extremely important to understand the current economy and to self assess the future to better one’s own finances. As defined in class, Macroeconomics is the study of the economy as a whole, i.e., the causes and relationships between important economic indicators such as unemployment, inflation, and the aggregate level of output or income, and the interrelationship among different economic sectors. It is highly important for citizens of the United States to understand how to view these economic indicators in order to be informed citizen- not just repeating what was said on the cable news networks. Every legal citizen of the United States has the power to vote starting at their eighteenth birthday. Local elections, state elections and federal elections all play a roll in that person’s life which makes it important to
…show more content…
The Federal Reserve, FED for short, controls monetary policy. Monetary policy is essential to assure economic stability as the FED can act quickly, anonymously from the red tape found in Congress this day in age. For example, it was the FED that first responded to the financial meltdown the United States is just recovering from. In 2008, the Federal Reserve system then chaired by Ben Bernanke, added 800 billion USD to the economy through monetary stimulus. It took Congress and the president several more months to getting around to 800 billion USD in fiscal
The Federal Reserve controls the economy of the United States through a variety of tools. They use these tools to shape the monetary policy of the United States in order to promote economic growth and reduce the rate of inflation and the unemployment rate. By adjusting these tools, the Fed is able to control the amount of money in the supply. By controlling the amount of money, the Fed can affect the macro-economic indicators and steer the economy away from runaway inflation or a recession.
Over the past few years we have realized the impact that the Federal Government has on our economy, yet we never knew enough about the subject to understand why. While taking this Economics course it has brought so many things to our attention, especially since we see inflation, gas prices, unemployment and interest rates on the rise. It has given us a better understanding of the effect of the Government on the economy, the stock market, the interest rates, etc. Since the Federal Government has such a control over our Economy, we decided to tackle the subject of the Federal Reserve System and try to get a better understanding of the history, the structure, and the monetary policy of the power that it holds.
The Federal Reserve System is the central bank which regulates and controls the monetary and banking system. Their primary focus is to regulate the health of the economy as a whole and implements monetary policy to help increase the money supply during a downturn, and restrict the money supply during periods of excessive growth. During periods when the economy faces high inflation, federal reserve will use contractionary monetary policy by decreasing money supply which in turn results in higher interest rates, lower investment spending, and lower consumer spending. In contrast, when the economy encounters a recession, federal reserve will utilize expansionary monetary policy by cutting interest rates or increasing the money supply to boost economic activity. During expansionary monetary policy, higher investment spending will raise income and higher consumer spending will help the economy. A tight (contractionary) monetary policy occurs when Federal reserve (central bank) raises the
"Monetary Policy is the most significant function of the Fed; it is probably the most-used policy in macroeconomics" (Colander, 2004, p. 661). This paper will discuss and elaborate on "The Monetary Policy Report" submitted to the Congress on February 11, 2003 and concepts of Macroeconomics by David Colander. The state of the economy, concerns of the Federal Reserve, and the stated direction of recent monetary policy will also be discussed.
Seldom do individuals realize the significance of acquiring a proper understanding of economics as a whole, let alone any subfields that branch off of it. Every aspect of economics is relative to another within itself, much like the roots of a tree are relative to the leaves or fruit that it bears. Attempting to distinguish between micro and macroeconomics in terms of significance to the real world is unavailing. Having a formal comprehension of this science begins with the principles and theor...
There is an abundance of information about our economy on the television newscasts, in the newspapers, and on the Internet. A lot this news is very confusing, particularly when one article contains information that conflicts with another article. This sometimes happens within the same day. One day you may be watching the news and hear that the interest rates and inflation will be rising soon and rapidly, and the next minute you hear the interest rates and prices will remain steadily under control for some time. To complicate things even further, the news is oftentimes clouded with opinions or biases. I have learned in this course that the best way to get an accurate account on issues concerning the economy is to go straight to the source, which is the Federal Reserve.
To understand the world we live in today, we need to understand what economics is and where it came from. Economics is the social science concerned with the production and consumption of goods, services, and the analysis of the commercial activities of a society. Economics also deals with the choices we make to fulfill our wants and needs and how we spend and invest our money. It is split into two main parts known as macroeconomics and microeconomics. Macroeconomics is the study of national or international economies while microeconomics studies individuals or firms within the economy. Adam Smith is widely known as the founding father of modern day economics, but it is actually an Irish banker Richard Cantillon. Richard Cantillon wrote his book “Essai sur la Nature du Commerce en General" which translates to “An Essay on Economic Theory” in the 1730’s
This phase of Macroeconomic history started with the book entitled “An Inquiry into the Nature and Causes of the Wealth of Nations” written by Adam Smith in 1776. (Smith, 1904) Working of the economy was presented by the classical economists like Smith, Ricardo, Say, and Marshal etc. According to the classical economists, “Supply creates its own demand.” It means that whatever is produced in the economy is sold. So, there is no question of unemployment in a market. They also argued that savings is always equal to investment. (Shahid, 2013)In short, they proved that there is always full employment in an economy based on the following:
In conclusion, regardless of Macropoland’s current economic condition, it is fair to say that it is all part of the business cycle. The business cycle has three parts: peak, trough, and peak. The peak is the date that the recession starts. In Macropoland’s case, the peak would be at the beginning of 1973, its trough somewhere between 1973 and 1974, and then its peak again at 1974. In the second scenario, Macropoland is either at its trough, where it is about to head up again because of its low inflation rate, or it is at its expansion, on its way to heading to its next peak.
McEachern, W. A. (2012). Macroeconomics: A contemporary introduction (10th ed.). Mason, OH: South-Western Cengage Learning.
Microeconomics is the study of an individual economy, or of the different segments within the larger economy, while macroeconomics is the study of aggregate economic behavior, or the economy as a whole(Madura 103). The main goal of macroeconomics is to determine the impact of consumer spending on total output, employment, and prices.
The study of economics is important to everyone. Financial decisions affect everyone in their day-to-day routines. Economics is the study of how society manages its scarce resources (Mankiw, 2012). Macroeconomics is the study of economy wide phenomena, including inflation, unemployment, Gross Domestic Product, and economic growth (Mankiw, 2012). Macroeconomics is important because, it is how all of us relate into markets and economies. Many news articles today are centered on the economy and current events. One of these articles lends itself to many economic principles and ideas. Even though there are many important topics not covered in the article, the article titled, "You Are What You Owe" in Time, encompassed many general economic principles as well as the many macroeconomics indices illustrated in the article.
Macroeconomics is the study of the economy as a whole, which looks at economic growth, unemployment and inflation. (Dobson and Palfreman, 1999) Government macroeconomics objectives can dividend into
When I took the scores of macroeconomics I thought I was going to get the same old spiel of how the economy works. Little did I know I will discuss economics and going to Depth and he and other economical situations will be brought up in resolved
What is Microeconomics? This question was left unanswered when I initially enrolled in this course. Microeconomics is the social science that studies the implications of individual human actions, specifically about how those decisions affect the utilization and distribution of scarce resources. Microeconomics shows how and why different goods have different values, how individuals create more efficient or more productive decisions, and how individuals best coordinate and cooperate with one another. Microeconomics does not try to explain what should happen in a market, but instead only explains what to expect if certain conditions change. For instance, If the price of the new iPhone 8 is higher than the previous model will the consumer buy it? There are several elements that will play into getting an answer for this question, but gives you a general idea of what microeconomics entails.