Economics Essay Samples
[...] The economic growth springs from better recipes, not just from more cooking. New recipes generally produced fewer unpleasant side effects and generate more economic value per unit of raw material. Economics is described by two facts that may be called economic problems. The first one is wants of the society, that are unlimited, and the second one is that resources scarce. Unlimited wants are those goods and services that have a utility that can satisfy a consumer. And economic resources are those resources that we use in producing goods and services. There are few types of resources: land, capital, labor, and entrepreneurship. So the main objective of economics is to find ways to best satisfy wants and needs of consumer and to spend resources effectively. [...]
[...] Inflation doesn't necessarily means that prices for all products and services increase, some prices may stay stabile and others can decrease. In 1970-1980, the level of inflation was high, but the prices for tape recorders, video players, and personal computers actually declined. One of the main problems connected with inflation is that rises and declines of the prices on different products are disproportional. Inflation is figured out with a help of price index. Another way to figure out the number of years, in which the prices will double, is so called the rule of 70. We just need to divide the number 70 by the rate of annual price level increase. [...]
[...] Controlling the money supply is the responsibility of a government agency, the Federal Reserve, which has an unusual degree of independence. The money supply consists partly of currency and checkable bank deposits. The currency is issued by the Federal Reserve and is a liability of the Fed. Most of the checkable bank deposits are liabilities of banks that are members at the Federal Reserve System. These banks are required to hold reserves equal to a certain proportion of their checkable deposits in the form of deposits at the Federal Reserve, which are also liabilities of the Fed. These two kinds of fed liabilities, currency and deposits of member banks with the Fed, are called the monetary base. They constitute almost all of the Fed.'s total liabilities. By controlling it's liabilities, the Fed can control the sum of the currency and checkable deposits fairly closely, although not exactly. [...]
[...] Following the rapid growth of many world economies during past 10-15 years, several financial crisis emerged throughout the globe. Globalization of production and investment in recent years has led to an enormous expansion of private long-term capital flows from advanced economies to developing countries, where the cost of the same type of production and its labor is much more cheaper than in the well-developed industrialized countries. There is, though, a serious disadvantage of investing in such regions - high instability of local economies, and, therefore, great exposures to risks of losing the investments. The fluctuations in these flows and changes in the exchange rates of the key currencies has led to a series of disasters, which involve the economies of the countries that receive the capitals. This crisis in turn can threaten political stability, as in the recent case of Argentina, where several prime-ministers being unable to tame the hyperinflation and panic, resigned within one week. [...]