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You know it's bad when a term like "Quantitative Easing" gets more press than Lindsay Lohan. Many of us, though, don't know what it means exactly. In short, it is a way for the Federal Reserve (the Fed) to help the economy grow by pumping money into the economy. Using supply and demand - let's show what's going on here. If the demand for money remains unchanged while the Fed acts, what happens to the "price" of money? If the price of money goes down, what happens to the quantity demanded of other things like exports and investing in capital?
From the NY Times blog, Economix, this is a look at how this recession compares to past recessions. Although the unemployment rate is generally a concern of macroeconomics, we can analyse the labor market with a micro-prespective. From the graph, how do you compare this recession to those of the past? Would you say that there is a shortage or a surplus of labor in the market? Thinking back to the superbowl blog post, if a lot of demanders caused the price of tickets to increase, what will likely happen to the price of labor (i.e. wages) in this economic climate?
As I said at the beginning of class my goal for you is to be able to read news articles and interpret charts with a more critical and "economic" eye. That being said, this WSJ article is an excellent summary of the current economic climate as well as an excellent test of your economic prowess. What concepts have we covered that are inherent in this article? Can you compare the income elasticity with the cross-price elasticity? Which elasticity dominates? Or, do they reinforce each other?
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July 2017
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