Source : http://www.myfoxatlanta.com/dpp/news/local_news/Bartering-Sees-Comeback-with-Businesses-20110511-am-sd
Summary:"
The article above highlights the revival of the traditional barter system on the market. Many small businesses are using the bartering system to accumulate profits and to combat the economy. One business owner Joe Cox was quoted saying "I get all my landscaping done, painting at my shop, gutters, dental care, I get all my basic necessities - prescription glasses." which he trades in exchange for his services and most experts say the key to bartering is finding the right network, skills, products and services.
Connections:
We covered the barter system in the chapter and it is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium for exchange such as money. Money was created and used because it was more convenient and is kept afloat because of its perceived value. In the article people have replaced money by exchanging their services and products because it reaps more benefits then using currency.
Reflection:
Although the bartering system is a great alternative, money is more practical in many situations in developed nations because it is divisible, durable, has value, etc. Having a bartering system in a complex economy is difficult and is not useful in many situations. There are people who use bartering system to escape taxes because it is not traceable.
Friday, June 17, 2011
Saturday, June 11, 2011
Great Depression vs Current Depression
Great Depression Vs Current Recession
Questions:
1. How did the Great Depression start?
The Great Depression started in the US when the stock prices fell on September 4th, 1929 and contributed to the crash on October 29th, 1929 also known as Black Tuesday.
2. How did the current recession start?
The recession started because consumer spending slowed down which resulted in a decrease in GDP, this is because our economy is largely driven by consumerism. The reason consumer spending slowed was because banks were lending money to people regardless of their credits and interests rates were very high. Also demand in housing properties increased because of high liquidity and low interest rates on mortgage loans. Prices increased and house owner swanted refinance at lower interest rates.
3. How did the government take part following the event? Were /are they successful attempts?
The Gov't took part in the great depression by introducing employment programs to employ the people who lost their jobs during the depression, they increased interest rates to keep the US dollar up but there was not much they could do. In the current recession the US Gov't gave bail-outs to several large companies like AIG, GM, Chrsysler. The Lehman Brothers weren't given bailouts and became bankrupt
4. What factors are present now that were not present during the Great Depression? (ie. Banking, online resources, etc.)
Some factors that are present now that were not during the depression are debit cards and online banking which has made banking and withdrawing your money a lot easier through ATMs, etc. There are also credit cards which lets you use money with high rates, however this can be dangerous because people may not be able to pay back the money they owe.
5. How did these two affect United States’ GDP?
In the Great Depression and the current recession the US GDP dropped dramatically and in the 1920s the US GDP peaked around 1$ trillion dollars. During the depression the dollar decreased and people lost their jobs. Because of this the US lost over $400 billion and the same situation although less severe happened during the recession.
6. Reflection: In your own words, tell me which one has made more of an impact on the world.
The Great Depression made a greater impact on the world because it had never been seen before and it taught people how to respond to a depression. As time passed the world learned how to deal with it and prepare themselves incase it happened again. I believe that we are more educated and knowledgeable now then ever before.
Questions:
1. How did the Great Depression start?
The Great Depression started in the US when the stock prices fell on September 4th, 1929 and contributed to the crash on October 29th, 1929 also known as Black Tuesday.
2. How did the current recession start?
The recession started because consumer spending slowed down which resulted in a decrease in GDP, this is because our economy is largely driven by consumerism. The reason consumer spending slowed was because banks were lending money to people regardless of their credits and interests rates were very high. Also demand in housing properties increased because of high liquidity and low interest rates on mortgage loans. Prices increased and house owner swanted refinance at lower interest rates.
3. How did the government take part following the event? Were /are they successful attempts?
The Gov't took part in the great depression by introducing employment programs to employ the people who lost their jobs during the depression, they increased interest rates to keep the US dollar up but there was not much they could do. In the current recession the US Gov't gave bail-outs to several large companies like AIG, GM, Chrsysler. The Lehman Brothers weren't given bailouts and became bankrupt
4. What factors are present now that were not present during the Great Depression? (ie. Banking, online resources, etc.)
Some factors that are present now that were not during the depression are debit cards and online banking which has made banking and withdrawing your money a lot easier through ATMs, etc. There are also credit cards which lets you use money with high rates, however this can be dangerous because people may not be able to pay back the money they owe.
5. How did these two affect United States’ GDP?
In the Great Depression and the current recession the US GDP dropped dramatically and in the 1920s the US GDP peaked around 1$ trillion dollars. During the depression the dollar decreased and people lost their jobs. Because of this the US lost over $400 billion and the same situation although less severe happened during the recession.
6. Reflection: In your own words, tell me which one has made more of an impact on the world.
The Great Depression made a greater impact on the world because it had never been seen before and it taught people how to respond to a depression. As time passed the world learned how to deal with it and prepare themselves incase it happened again. I believe that we are more educated and knowledgeable now then ever before.
Wednesday, May 4, 2011
Smart Phone (Money)
Article Used
http://business.financialpost.com/2011/04/23/smart-phone-money/
1. How long do you think it's going to take to get to all virtual cards? How many years? (1 point)Why? (1 point)
I dont believe it will take a very long time to transition from regular wallets to virtual wallets because technology is always changing and people are always getting accustomed to new innovations. For example the previous generation, who grew up with CDs, walkmans, and floppy disks are still using the same devices that teenagers are. It may take a couple of years but I don't believe it will be hard to get used to at all.
2. Who will not be on board with this new virtual wallet? (2 point)
I believe everyone will be on board with this because of my previous point of changing times and adapting to it. However there will still be a large minority of people who prefer to use wallets and other material means of currency over the virtual alternative. An example would be people who feel insecure about the safety of digital means and distrust new trends and technologies.
3. What companies are going to be affected negatively by this? Name 3 (3 points)
Some companies that will be negatively affected are companies like Interact and other Mastercard companies. This is because credit cards and debit cards will be used less as NFC (Near-Field Communications) are used more. If the demand decreases for debit and credit cards the companies that make money from it will not benefit. However, they may switch to an alternative to keep up with the times and minimize their losses.
4. Which industries are going to make money from this? Name 3 (3 points)
A lot of cell phone carriers such a Telus, Fido and internet companies like Shaw will make money because the demand for smartphones would increase dramatically. Other cellphone companies like RIM, Apple, HTC will also benefit from these changes as people flock to purchase these phones for convenience. As long as it becomes widespread and easy to use I believe this new idea will catch on and provide new possibilities for banking and technology.
Wednesday, April 6, 2011
Aggregate Demand and Oil Prices
Article:
http://www.guardian.co.uk/business/2011/mar/04/oil-prices-rise-again-libyan-fighting
Summary
The article mentions the rapid increase in oil prices, in one morning it had risen more then a dollar and Brent crude oil has risen from $116.20 which is up 1% due to fears the crisis was going to spread from North Africa to oil-rich countries in the Gulf. Chris Huhne is quoted saying,"the UK's climate and energy secretary, warned of a 1970s style oil-shock. He said if the oil price doubles from $80 a barrel last year to $160 a barrel this year, this could wipe £45bn off the value of the British economy in the next two years. "This is not just far-off speculation: it is a threat here and now."
Connections
The relationship between this article and Chapter 6 is that it is an example of aggregate demand. Aggregate demand is defined as "the total demand for final goods and services in the economy at a given time and price level." The price of oil has increased dramatically from 80$ last year to 116$ this year and the effects are global. Due to the increase in oil transportation will be more costly as well as other products such as food and goods because it will cost more to export and import products. This will effect many people worldwide as they will have to pay more for their goods and travel.
Reflections
With the price of oil increasing by such a dramatic amount, the daily life of the average person will be affected. Driving, food, goods and even people who switch to public transit will suffer. Oil is a crucial product in our society, without it everything will grind to a halt. Even with rising prices people will still be forced to buy oil in order to go about their day, unless they're bikers but they are irrelevant.
http://www.guardian.co.uk/business/2011/mar/04/oil-prices-rise-again-libyan-fighting
Summary
The article mentions the rapid increase in oil prices, in one morning it had risen more then a dollar and Brent crude oil has risen from $116.20 which is up 1% due to fears the crisis was going to spread from North Africa to oil-rich countries in the Gulf. Chris Huhne is quoted saying,"the UK's climate and energy secretary, warned of a 1970s style oil-shock. He said if the oil price doubles from $80 a barrel last year to $160 a barrel this year, this could wipe £45bn off the value of the British economy in the next two years. "This is not just far-off speculation: it is a threat here and now."
Connections
The relationship between this article and Chapter 6 is that it is an example of aggregate demand. Aggregate demand is defined as "the total demand for final goods and services in the economy at a given time and price level." The price of oil has increased dramatically from 80$ last year to 116$ this year and the effects are global. Due to the increase in oil transportation will be more costly as well as other products such as food and goods because it will cost more to export and import products. This will effect many people worldwide as they will have to pay more for their goods and travel.
Reflections
With the price of oil increasing by such a dramatic amount, the daily life of the average person will be affected. Driving, food, goods and even people who switch to public transit will suffer. Oil is a crucial product in our society, without it everything will grind to a halt. Even with rising prices people will still be forced to buy oil in order to go about their day, unless they're bikers but they are irrelevant.
Friday, March 4, 2011
Employment Report
Article
http://www.washingtonpost.com/wp-dyn/content/article/2011/03/03/AR2011030303030.html
Summary
The US economy has shown signs of improvement, corporate profits are up, consumers are spending more, and activity in the service sector has expanded. Job growth however has failed to catch up, only 36,000 new jobs in January have been added and the country needs 130,000 to keep up with the population growth. However, the US has added 196,000 new jobs in February and Stephan Stanley estimates that many firms "will have no choice but to hire en masse if [the] economy activity continues to pick up." Unemployment rate has risen .1 percent from 9%- 9.1% and hourly earnings are expected to rise. The U.S economy still faces numerous threats because of state fiscal crises, rising oil prices due to the Middle East and spiking food prices. The Fed also said that manfuacturers are passing along higher input costs for wheat, cotton and iron. On Thursday the Labor Department reported a surprise decline in weekly jobless claims and unemployment benefits, the number has fallen to its lowest in three years. The retail sector has also seen a increase in sales of 4.3% compared to 3.8%."We are seeing the indications that the underlying pace of job creation is improving and looking more sustainable," John Ryding and Conrad DeQuadros of RDQ Economics states.
Connection
This article relates to unemployment discussed in Chapter 5, but there has been improvements in spending, corporate profits are up and activities in the service sector has expanded. This all shows an improvement in the economy and with 196,000 new jobs in February and the the hourly rate increasing this is a good sign. Even with all this success though the unemployment rate has risen by .1% but this may be due to the population growth experienced in the U.S. Most of the economic factors have improved and weekly job claims and unemployment benefits has fallen to its lowest in three years.
Reflection
With the U.S seeing a large improvement in the recent month I hope that their economy will continue to recover because it will be good for the global economy also. If noone is out spending their money then it has a disastrous affect on the rest of the country. And with this many positive prospects recently it may encourage the corporations to follow suit by creating more jobs and employing more workers. However, there are still some problems production and the input cost of cotton, iron, wheat so the U.S will have to tread carefully. But with all the optimistic news I expect it will only get better as time goes on as people start working and feel more involved and confident in their country.
http://www.washingtonpost.com/wp-dyn/content/article/2011/03/03/AR2011030303030.html
Summary
The US economy has shown signs of improvement, corporate profits are up, consumers are spending more, and activity in the service sector has expanded. Job growth however has failed to catch up, only 36,000 new jobs in January have been added and the country needs 130,000 to keep up with the population growth. However, the US has added 196,000 new jobs in February and Stephan Stanley estimates that many firms "will have no choice but to hire en masse if [the] economy activity continues to pick up." Unemployment rate has risen .1 percent from 9%- 9.1% and hourly earnings are expected to rise. The U.S economy still faces numerous threats because of state fiscal crises, rising oil prices due to the Middle East and spiking food prices. The Fed also said that manfuacturers are passing along higher input costs for wheat, cotton and iron. On Thursday the Labor Department reported a surprise decline in weekly jobless claims and unemployment benefits, the number has fallen to its lowest in three years. The retail sector has also seen a increase in sales of 4.3% compared to 3.8%."We are seeing the indications that the underlying pace of job creation is improving and looking more sustainable," John Ryding and Conrad DeQuadros of RDQ Economics states.
Connection
This article relates to unemployment discussed in Chapter 5, but there has been improvements in spending, corporate profits are up and activities in the service sector has expanded. This all shows an improvement in the economy and with 196,000 new jobs in February and the the hourly rate increasing this is a good sign. Even with all this success though the unemployment rate has risen by .1% but this may be due to the population growth experienced in the U.S. Most of the economic factors have improved and weekly job claims and unemployment benefits has fallen to its lowest in three years.
Reflection
With the U.S seeing a large improvement in the recent month I hope that their economy will continue to recover because it will be good for the global economy also. If noone is out spending their money then it has a disastrous affect on the rest of the country. And with this many positive prospects recently it may encourage the corporations to follow suit by creating more jobs and employing more workers. However, there are still some problems production and the input cost of cotton, iron, wheat so the U.S will have to tread carefully. But with all the optimistic news I expect it will only get better as time goes on as people start working and feel more involved and confident in their country.
Thursday, March 3, 2011
Progressive Tax and Estonia
Article
http://balticbusinessnews.com/article/2011/2/21/experts-estonia-should-not-rule-out-progressive-taxSummary
Foreign and Domestic economic experts believe Estonia shouldn't rule out the possibility to introduce a progressive tax under certain conditions. One economist named Stuart Adam states "Overall, a flat rate of individual income tax has no advantages in itself. It is also restricting the way the government can re-distribute tax revenues." The biggest reason for use of a flat rate is that its simple but it comes with a big disadvantage by reducing work motivation and affects economic growth. Another ecnonomist Viktor Trasberg believes progressive tax will help the state collect a larger amount of revenue and decrease tax burden on low income owners. Progressive tax may also stabilise the economy because people are paying less taxes. Bert Brys a OECD tax economist also says that before Estonia considers progressive taxation, it should revise its tax exemptions because "Usually the case is that the rich will get more benefit from various tax exemptions related to housing and pension saving costs" and Estonia may need to sacrifice some economic growth for equality.
Connection
This relates to Chapter 4 because it shows how a progressive tax can be applied in real world situations and of the advantages it may have over flat tax rates. I believe that a progressive tax would be good for a nation like Estonia due to the fact that it can close bridge between the classes and give the citizens a more equal standard of living instead of having extreme situations. This will also help stabilize the economy and I feel the advantages outweigh the disadvantages in this case.
Reflection
The only disadvantage mentioned in the proposal of a progressive tax is that it will be more complicated then the simplicity of a flat rate tax which would tax everyone the same amount without taking into consideration any other factors. This is why I feel a progressive tax should be used because it is more developed and thought about then the flat tax rate. It provides an equal advantage for everyone in the country to live their life comfortably without having to worry as much about taxation.
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