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?
The unemplyment rate, which is a narrowly defined measure, inched downwards this month from 8.3% to 8.1%. While at first glance this may seem to be a good thing, this WSJ article points out why it may not. Do you think that this unemployment problem is worse for any certain group (income class, race, gender)?
Potential essay question: What do you think a surplus of workers will do to the wage paid to newly employed people? If you think future wages will adjust downward, how far down can they go? Will this surplus of workers ever cease to exist?
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?
This one comes from the WSJ's Real Time Economics. A staggering 2.2 million people will lose their unemployment benefits if an extension is not passed. That means 2.2 million people who've received federal aid for the past 99 weeks (almost 2 years!) will be without a paycheck of any kind. We know as economists though that people respond to incentives. In your opinion do unemployment benefits keep people from working, or is this a necessary safety net? If you were the policymaker would you allow people to receive benefits for longer?
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