Economics explains how to distribute limited resources over our unlimited wants. Scarcity has the meaning that there aren’t enough goods or resources in the world to satisfy everyone’s needs and wants. While shortage supports that definition because shortage is when the markets reach past equilibrium, and demand exceeds supply. Economics help markets by balancing supply and demand ratio and determine the price of the resource.
Find the changes in Consumer Price Index for the past three years. Discuss your findings and identify your source.
The Consumer Price Index is a “program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services.” Individual prices go up and down by differing percentages. The Bureau of Labor Statistics created a solution which is called a fixed market basket index. For example, gasoline and the oil industry. Gasoline prices increased 26.4%, bringing prices at the pump to a level 5.0% below the record high of June 2008. This increase followed an 18.9% gain in the 12 months to June 2011. The chart below shows a how the gasoline prices of increased and decreased over the years since 2006. I have gotten all information off the Bureau of Labor Statistics website (http://www.bls.gov/cpi/).
According to the Keynesian Model, there are two components of consumption spending which are autonomous consumption and marginal propensity to consume. The autonomous consumption is the minimum level of consumption that would still exist even if a consumer doesn’t have an income, which since it isn’t dependent on the income, it has no affect. The other component, marginal propensity to consume represents the proportion of an aggregate raise in pay that is spent on the consumption of goods and services instead of saving. This means that for every dollar that income increases, consumption spending will increase.
By Joe McManus In these times of war threats and terrorism, it is becoming extremely difficult for United States diplomats to maintain friendly relationships with oil rich countries. As a result, the U. S. economy may be faced with a possible oil shortage and continuous rising gasoline prices. As stated in the article "All About the Oil", Time Magazine "Iraqi exiles flew into Washington, D. C. in ...
MPC depends on income while autonomous consumption does not.
Explain how indirect crowding out can offset expansionary fiscal policy.
Crowding out is the tendency for an expansionary fiscal policy to reduce other components of aggregate demand; it can increase in autonomous expenditure which creates the IS curve to shift outwards and results in a rise in income and interest rate which consequences a fall in investment. Crowding out weakens the fiscal policy which affects is the tendency of expansionary fiscal policy.
How can the Federal Reserve System change the money supply without engaging in open market operations?
The Federal Reserve System can change the money supply without engaging in open market operations by changing the discount rate. The Federal Reserve is known as the central bank for the United States. If any bank borrows from the Federal Reserve, the interest rate the bank pays to the Federal Reserve is called the discount rate.
When the newly founded United States of America gained its independence from Britain, they were faced with many new challenges. One of their biggest challenges was establishing and building upon their own domain that Britain had transferred at the Peace Treaty of 1783. 1 Of course, this land was still inhabited by Indian peoples. The United States knew that territorial expansion was inevitable and ...
Banks used to exchange their assets on a discounted rate to the Federal Reserve in exchange for cash. If the discount rate is decreased, banks are more likely to borrow which allows there to be more reserves into the banking system. More money supply results in banks having the option to charge lower interest rates.