Grantham University The Origin of Economics & Federal Reserve System Essay

I’m stuck on a Business question and need an explanation.

Each question should be 75-150 words in length.

1. The origin of economics as a science dates back to the publication of An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith in 1776.  Smith believed a market economy would generally bring individual self-interest and the public interest into harmony.

Based upon those notions of self-interest and public interest and the bringing of both into harmony, according to Adam Smith, how would a market economy accomplish that harmony about which he describes?  What is government’s place in that market economy?

Think about society’s need to choose amongst competing resources and goals.  How does personal gain affect choices by individuals and government?  Opportunity costs.  While we want to do one thing, we can’t do others based upon scarcity and opportunity costs.  Resources are finite.  What about incentives as opposed to free offerings?  What about trade? 

2. Markets seek equilibrium, and the demand for goods and services will come to an equilibrium with supply of goods and services.  When markets are not in equilibrium, surpluses and shortages, as well as underground markets, can exist.  Sometimes, the government may want to intervene in markets to try to help reduce economic hardships.         

What is the difference between a price floor and price ceiling?  According to the laws of demand and supply and how market equilibrium, efficiency, and equity are reached, do attempts to repeal those laws and market results with price floors and price ceilings justify legislative bodies to implement price controls?

3. Politicians have a strong incentive to follow a strategy that will enhance their chances of getting elected and re-elected.  Political competition more or less forces them to focus on how their actions influence their support among voters and political contributors.

Are voters likely to be well informed on issues and the positions of candidates?  Why or why not?

4. Gross domestic product (GDP) is a measure of the market value of final goods and services produced within the borders of a country during a specific time period, usually a year. 

What is the GDP deflator?  How does the GDP deflator relate to real GDP? 

5. It is important to distinguish between changes that are anticipated and unanticipated because the impact on the economy will differ between the two.  The economy is in long-run equilibrium when the short-run aggregate supply curve, aggregate demand curve, and long-run aggregate supply curve are in equilibrium.   

What are the major factors causing a shift in aggregate demand (inward or outward)?  What are the major factors that will affect short-run aggregate supply?  Long-run aggregate supply?

6. When the economy is in a recessionary mode, aggregate demand shifting inward is often the culprit.  Deflationary pressures on prices ensue, and output falls, causing problems like higher unemployment and contraction of the economy.   

When the economy is in a recessionary mode, what will likely be the actions by government using fiscal policy?  Is it better to concentrate on aggregate demand or aggregate supply?  Why? 

7. The Federal Reserve System was established to provide a stable monetary system for the entire economy.  The Federal Reserve Bank (the Fed) has three major tools to control the money supply: 1) reserve requirements, 2) discount window for loans to member banks, and 3) open market operations.

When the economy is in a recessionary mode, what will likely be the actions by the Federal Reserve using monetary policy?  Suppose the Federal Reserve purchases a $100,000 bond from John Doe, who deposits the proceeds in the Manufacturer’s National Bank; what will be the impact of this transaction on the supply of money?

How do each of the Fed’s tools work?  What is the fractional reserve system, and how does it work in relation to the Fed?

8. Imports increase the domestic supply and lead to lower prices for consumers.  Exports reduce the domestic supply and push price upward.  The net effect of international trade is an expansion in total output and higher income levels for both trading partners (law of comparative advantages).

“The United States is suffering from an excess of imports.  Cheap foreign products are driving American firms out of business and leaving the U.S. economy in shambles.”  Evaluate this view.

superadmin (28431)
New York University
15 MILLION STUDENTS HELPED!

Sign up to view the full answer

View Answer

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
Have a homework question? Get help from verified tutors now!

Are you looking for Assignment Help save 10% with this code GEEKS10