"drawing board" on their website. Watch the following video (Click on post title to go to video) and in your post you must do two things.
1) Come up with a legitimate higher order thinking question over material covered in the video.
2) Provide an answer to someone else's question that they posted. (In your answer be sure to list whose question it is you are answering.)
3) Once someone's question is answered it is no longer usable by anyone else.
3) Once someone's question is answered it is no longer usable by anyone else.
My Question #1"How is the Economy like Goldilocks?
154 comments:
Rendon Reinarz
Period 5
1. Although it seems ideal to have a low inflation rate, what are some possible problems of having a low inflation rate?
2. The economy is like Goldilocks because it needs to be just right to function properly. If the economy is too hot, inflation rates are too high, and demand will decrease because the public cannot afford higher prices. If the economy is too cold, deflation occurs, and consumers will hold off on purchasing in hopes of a lower price drop which leads to a drop in current demand. The economy must be just right to function and remain stable.
1. What happens if you have a fixed income and inflation rates rise, would it be bad or good for your purchasing power and how would it effect the economy.
2. Rendon's answer- Some problems with a low inflation rate is that the banks will have a shock which would cause the banks to have a higher interest rate with loans and it would affect the wealth between borrowers and lenders. It would also cause customers to expect the price to drop which would not help the providers as it would hurt the economy as less people spend money on different objects that would usually bring in more profit for the business.
Michael Chan
4th
1. How does unpredictability in inflation affect both borrower and lender?
2. Michael's Question: What happens if you have a fixed income and inflation rates rise, would it be bad or good for your purchasing power and how would it effect the economy.
Answer: If inflation rates rise while you are on a fixed income, then it would lower your purchasing power, as you would be losing more money per interest point, with no way to gain it back. The economy would be affected, since most people would try to save and not spend money, resulting in the circling of businesses not being able to afford losses, ultimately resulting in unemployment.
Elwin Mathew
Period 1
1. How does waiting to buy a product in hopes of prices decreasing affect the economy?
2. Elwin's answer: Unpredictability can affect both the borrower and lender in that if the lender lends the borrower a fixed rate and inflation is lower than the fixed rate, then the lender gains profit. However, if the inflation rises to the same rate as the lender's fixed rate, then the lender gains no profit. Also, if inflation rises above the the fixed rate of the lender, the borrower is able to gain.
Matthew Yee, period 1
1. What can happen to the value of your car and the debt you owe on it during a recession?
2. Matthew's Answer: If prices fall consistently, then people will be drawn to wait for the prices to fall more which causes the current demand for the product to fall, leading the business to have to cut down on production which ultimately causes unemployment. This can cause an economic crisis because if people lose their jobs they are unable to afford the goods, regardless of the deflation
Tejiri Okukpe
Period 1
1. Why are the feds focused on keeping prices stable?
2. Mia's answer: The value of the car would go down and also the debt you owe will still have to be paid off. It would be harder to pay off that debt because of prices falling due to recession.
1.Why do central banks like low inflaton rates?
2.Okupe's answer: To keep inflation stable, which will also help with many other things like higher employment rate.
-KEVIN SANI PERIOD 1
Ali Noorani Period 1
1: Why is it crucial for businesses to determine whether prices have risen on a good or if it is just inflation?
Tejiri's answer: The feds are focused on keeping the prices stable because they want interest rates to remain the same for as long as possible.
Ali Noorani Period 1
Kevin's answer: central banks like low inflation rates because they maximize profits.
1. What can happen when the general price of goods and services are rising too rapidly? (Explain the process in which leads to one getting laid off).
2. Ali Noorani's answer:It is crucial for businesses to determine whether prices have risen or if it is inflation because if you decide that it is a change in price or some other reason tied to the laws of supply and demand, and it turns out it was inflation, then you have made a bad business descision and sunk capital into the cost of rising inflation.
Taryn Gheen
Period: 5
1. It seems ideal for prices to stay low, but how does unemployment tie in with deflation?
2. Answer to Taryn Gheen's question: If the general prices are rising due to inflation, it makes it more difficult to buy capital, which results in lower production and ultimately getting laid off, because the demand for production doesn't require lots of employees as there isn't many goods and services being produced.
Epstein Jacob
Period 4
1. What happens if one has a fixed income, yet prices begin to rise?
2. Answer to Epstein Jacob's question: Deflation leads to unemployment. On the other hand, unemployment leads to deflation. If people are waiting to buy goods due to the economic state, companies lose money. As companies lose money, they start to fire people. As people are fired, they buy less products. This leads to deflation, and more unemployment.
Swati Kundra, 1st
1. What concept that Adam Smith developed makes sure that prices always remain stable or go back to being stable?
2. Answer to Swati Kundra's question: If you are on a fixed income and prices begin to rise your purchasing power decreases. Therefore, you will not be able to buy as much as you did beofre prices began to rise.
Sophie Wedgeworth
Period 5
1. How does interest premium effect a family’s financial status if they took out a loan to pay for their kids College tuition?
2. Answer to Sophie Wedgeworth’s question: The concept is invisible hand as it automatically sets the supply and demand of goods to reach equilibrium in a free market
Jestin Raju
4th period
1. If the minimum wage increases, how will it affect the company's profit?
2. Answer to Jestin Raju's question: If the interest is high, the family will owe more money to the institution. If the interest is low, then the family will owe less.
Alexis Chan
5th Period
1. How does income affect purchasing power?
2. Answer to Alexis Chan's question: If minimum wage increases then the profits of a company forcing them to lay off workers which then affect other businesses because they can't buy as much.
Jordan Jacobson
Period 4
Matthew Reyes
Period 1
1) When lenders charge interest premiums, why does it result in higher rates?
2) The answer to Jordan Jacobson's question: If income increases, it means a person is able to buy more goods and services with his or her income than was possible before, thus raising the purchasing power as well. Overall more income equals more purchasing power and less income equals less purchasing power.
Amber Montemayor
2nd period
1) What could go wrong if you were someone looking to make a big purchase using a loan during a time when prices have been falling?
2) Answer to Matthew Reyes’ question: When lenders charge interest premiums, it is because they want to compensate for the risk created by unpredictably changing prices. Thus, rates go up because they offer more protection for lenders in the case of rising prices due to inflation.
Alvin Yolanda Ewaldo
1st Period
1) What are the potential issues that can occur when interest rates are as low as less than 1%?
2) Answer to Amber Montemayor: It's possible that you could take on greater risks to invest on bigger purchases, like a house, due to the decrease in interest rates. However, the rates could rise, which could make the loan payment potentially unaffordable to pay off later on and hence a massive debt will become overwhelming.
1) What are the options the federal government can do to increase economic activity if the inflation rate is at a near zero?
2) Answer to Alvin Yolanda Ewaldo's question: The potential issues that can occur when interest rates are less than 1% are that people can be discouraged from saving their money in banks because they could be loosing money if the inflation rate increases faster than the interest rate; it can decrease bank deposits which can increase the demand for loans, causing more people to be in debt.
-Anne Dang, 4th period
Kevine Jaimon 5th Period
1. What is the main purpose of a Fed Funds Rate?
2. Answer to Anne Dang: Lowering the fed funds rate, purchasing securities, and developing specials programs are all some options the federal government can do to increase economic activity if the inflation rate is near zero.
Housna Kadrie
Period 2
1. How does purchasing power and employment rate relate? What happens to jobs if their is less purchasing power and why?
2. Answering Kevine Jaimons question: The federal funds rate is used as a important benchmark in financial markets. It is the interest rate banks and other institutions charge one another on overnight loans. Also, the fed funds rate is used to establish interest rates for credit cards, car loans, small business loans and home equity lines of credit
Nikita Thomas
5th period
1) what is the direct effect of prices decreasing? How does prices decreasing lead to overall unemployment?
2)Answering Housna Kadrie's question: When prices rise, consumers are less likely to purchase and more likely to save their money, which means less purchasing power. Because of this, the overall demand for goods and services decrease which leads to the production of the companies making these goods and services decrease and the company is forced to cut back on their spending, which means firing employees and jobs are lost.
Kyuri Baag
Period 4
1) If inflation runs low and fed fund rates are almost at zero, what are the consequences? What does the fed do?
2) Answer to Nikita Thomas's question: The direct effect of prices decreasing is delayed purchases by consumers because they think prices may continue to go down. If many people think similarly, it could slow the overall economy. This decreases demand which slows production and results in increased possibility of being fired.
Ambareen Virani
Period 4
1. The answer to J. Loi's question about the consequences of uncertain prices in an economy is the redistribution of wealth among borrowers and lenders. Lenders would adjust their loan terms by charging higher so that the unstable economy does not negatively impact them.
2. Is it bad to have debt when prices are falling in the economy? Why?
Harshada Kulkarni
Period # 1
1) What do you think would happen economically if the CPI is estimated significantly inaccurate?
2) Answer to Ambareen Virani’s question:
During times of deflation, since money supply is tightened, there is an increase in the value of money, which increases the real value of debt. This makes it harder for borrowers to pay their debts. Since money is valued more highly during deflationary periods, borrowers are actually paying more because the debt payments remain unchanged.
1. Why is it bad for the economy when prices for goods are going up and down?
2. If the CPI is inaccurate, it will too provide an inaccurate measure of inflation which will cause problems. The prices of some goods and services could rise, and increase at a faster rate than the CPI does. Soon there after, politicians could begin to call for price controls, and then the real damage to the economy begins.
Marcus Ellis
1st Period
1. Why is it bad for the economy when prices for goods are going up and down?
2. Harshada's Question: If the CPI is inaccurate, it will too provide an inaccurate measure of inflation which will cause problems. The prices of some goods and services could rise, and increase at a faster rate than the CPI does. Soon there after, politicians could begin to call for price controls, and then the real damage to the economy begins.
Marcus Ellis
1st Period
Josephine Henry
4th period
1. Why is a low inflation rate so hard to produce?
2. Marcus' Question: The prices of goods rising and falling is bad for the economy because of many instances. For example, if a good is too expensive for an individual that person no longer has purchasing power making the demand for goods go down and causing business' to fall back on production and that leads to people being let go from their jobs. Same goes for the opposite side, as prices are to go down in the future people delay their purchases slowing down the economy. Both sides of the spectrum have downfalls whether due to inflation or deflation.
Blogger J. Loi said...
1. What are the consequences of variable and uncertain prices in an economy? How would lenders adjust their loan terms?
2. Answer to Kyuri Baag's question: Since the fed fund rates are almost zero and inflation is low, the fed is unable to lower rates more to spur growth. Consequently, the fed would purchase securities and develop special programs to compensate not being able to lower rates below zero.
Jun Hin Loi
Period 4
1. What are some of the consequences of an economy being to cool?
2. Answer to Jun Hin Loui's question: Uncertain prices in the economy can either cause for inflation to rise or fall. Because this affects a lenders profit, they often raise rates just incase inflation rises and there profit falls. Therefore, wealth gets redistributed between borrowers and lenders.
Jamie Chaffer
Period 1
Elizabeth Stech
Period 4
1) What are the consequences of having a economy that is "too hot?"
2) Josephine's Question: Central banks usually do not like to have a low inflation rate because the economy faces shocks frequently. If an economy faces a shock and does not have a cushion (inflation rate) to fall back on, they are faced with having to lower the fed funds rate, purchase securities, and develop special programs to compensate for not being able to lower rates below zero.
1) Even though many people know how the economy functions with regards to inflation, why do you think people make decisions less readily in too cold economies even if it doesn't actually help the economy grow?
2) Elizabeth's question: An economy that is too hot makes running a business very unpredictable. It can be difficult to tell if prices are rising just because the economy is growing or if it is due to inflation. This then can cause a loss in the business if the rising prices are due to inflation as value of capital purchased decreases.
Julianna Hastreiter
period 5
1) In the video, they said that the Federal Reserve can help out an economy by lowering interest rates to spur growth. However, they said interests are now essentially at zero. So what can the Fed now do if we were to have a slowdown in the economy?
2) Julianna's question is a bit confusing. If the question posed means, "Why do people put off making buying decisions in a cold economy even though its bad for the economy?"
The answer I would think is that people don't do things in their personal life with the greater economy in mind. They make decisions based upon their own families and how it benefits them; not the overall economy.
Denise Doyle
Period 5
Kriti Bansal
Period 5
1) How do premium rates affect the lenders themselves and the borrowers in the long-run?
2) Denise's question: The Federal Reserve can do the opposite. They can now essentially increase interest rates which signals to the people that the economy is strong and healthy. The Federal Reserve increases interest rates when unemployment is high i.e. when there is a slowdown in economic growth.
Alan Cummins
4th Period
1. How do banks compensate for making loans in an unpredictable environment?
2. Jamie's question: The negative effect of an economy that is too cold is that consumers/ buyers will delay purchases in order to get a better deal (i.e. lower price). This in turn leads to a decrease in demand, which leads to a decrease in productivity and a subsequent rise in unemployment.
Lauren Chamberlin
Period 5
1. What happens/ occurs when you have stagnant/ decreasing prices while the economy has a decreasing prices in regard to you being in debt? Why?
2. In Alan's question, banks compensate for making loans in unpredictable environments by giving higher rates to potential loaners through interest premiums.
1) Why is it so hard to pay off the accumulated debt, and is there any way to fix it? What does prices and wages factor into it?
2)Kriti's Question: When lenders are charging interest premium, they will insist on higher interest rates since they anticipate inflation will be higher. This means consumers will tend to borrow less thus leading down into a path of a slowed economy, meaning loss of jobs. Inflation itself is difficult to keep track of and can lead to an unintended gain to either of of them, which all encourages "shortsightedness".
Jono Joseph
5th
1) What would a lender do if prices unpredictably jumped between deflation and inflation and why?
2) to Answer Jono's question, It's hard to pay off accumulated debt because the interest makes the price go high and higher, making it harder and harder to pay off the debt. This is expecially bad in the case of deflation, because you end up having to pay more money. If prices are too high, people will be wary of making investments for bankers to make interest off of, and this would also lead to the inflation of wages, and the overall economy, in which case the lender would be making less of the interest.
Kyle okeke
2nd period
1) Is having some inflation good for the economy? How?
2) Kyle's Question : What would a lender do if prices unpredictably jumped between deflation and inflation and why? The lender would most likely come up with a set amount to lend out so he is not so much as affected by inflation and deflation. Furthermore if circumstances were to be changed or affected he could react accordingly
Raoof Ali
Period 5
Pamela Gheriafi
Period 4
1) Do you think taking a loan helps the economy or hurts it?
2) Raoof; Inflation is less important and even a net drag on the economy. Rising prices make savings harder, driving individuals to engage in riskier investment strategies to increase or even maintain their wealth. Some claim that inflation benefits some businesses or individuals at the expense of most others.
Madison Panetti, Period 5
1.Why do central banks disagree with having a non-existent/low inflation rate?
2. Raoof’s Question: Yes, some inflation is good for the economy as long as it is kept low and stable. This allows for businesses to keep their employees and for people to be motivated to spend their money.
1.) How does the Federal Reserve influence the federal funds rate?
2.) Madison's question: Banks don't prefer very low inflation rates because they would be detrimental during economic shocks, therefore the feds wouldn't be able to lower thew rate anymore to spur growth in the economy.
Naomi Samuel
Period 5
1.How does high interest rates hurt those that are trying to take out a loan?
2.Pamela’s question: Taking our loans put us in debt because the more loans we take out the more money we owe towards the banks. It will hurt the economy because money is being taken out and slowly repaid therefore the economy will suffer for a bit until it gets its money back. One way it will help the economy is if the interest rates are higher. That way they will receive more money back from the loan.
1. When inflation is low and the fed funds rate cannot be lowered any further what actions must the Feds take in order to compensate for this and keep the economy running?
2. Naomi's Question: Higher interest rates, or interest premiums, hurt those who are trying to take out loans because it discourages the individual from paying such a high rate for that loan. Due to this factor, individuals feel the need to borrow less causing the economy to slow down and jobs to be lost.
Roshan Mathew, Period 1
1. What is the problem with having prices that are variable and uncertain and why can this be worse than just having inflation that is too high or too low?
2.Roshan's Question: In order to make up for the low inflation combined with the low fed funds rate, the fed purchases securities and develops special programs in order to compensate for not being able to lower rates below 0.
Priya Thomas, Period 2
1. Why is high inflation essentially bad for the economy?
2. Priya's Question:Having prices as a variable or an uncertain number can be bad for the economy because an estimated value or a guessed value of a good can cause inflation to be high because people tend to lean towards the more expensive side of pricing.
2nd Period
1. How does employment play a factor towards rise or fall in inflation?
2. Answer to Jonathan: Inflation decreases the amount of goods that money can buy. Since it decreases the purchasing power of people's money, inflation encourages them to spend it instead of letting it sit idle and lose its value over time. This way, it helps prevent the stagnation of the economy. It can wipe away people's savings.
Kevin Yu, 2nd Period
1. Why would people waiting on a price to drop result in deflation?
2. Answer to Tanmay: Employment doesn't play a factor towards the rise/fall of inflation, but the other way around. If the price inflates the demand goes down, leading to production being hampered and people losing their jobs. Deflating prices will cause the opposite effect, since demand for an item goes up and there need to be jobs to fulfill that demand.
Aolin Yang
5th Period
1. Why would shocks necessarily bring inflation down?
2. Answer to Kevin: It is the other way around: Deflation makes people wait on a price to drop. In a deflation, prices are dropping, so people want to wait until prices are as cheap as they can get before buying.
1. If hyperinflation were to occur, what would be the extent of the effects upon the consumer and the entire economy in general ?
2. Answer to Aolin’s question: in occurs because the supply of goods and services are greater than the supply of cash available.
William Anderson
2nd period
1. Why would inflation scare stockholders?
2. Answer to William's Question: Hyperinflation would result in a drastic decrease in demand of goods/services and destroy the economy. It will also decrease the value of American currency greatly.
Abraham Pazhoor Period 1
1.) What adjustments would a lender make due to randomly fluctuating inflation rates? Why?
2.) Answer to Abraham's Question: Inflation would scare stockholders because it would cause a decrease in the overall value of their stocks, and also force prices up and buying down thus negatively effecting the companies they support.
Dominic Kochen 1st Period
1) What "chain reaction" occurs as lenders are charging interest premiums?
2)Answer to Dominic's : Lenders will adjust their loan terms to compensate for making a loan in a risky environment where they could lose money. To compensate for that risk, they decide to charge more for their loan. That is called an interest premium
Jyotis Joy, 5th period
1. Explain why redistribution of wealth is a bad thing & whether or not, in your opinion, it is unfair.
2. Answer to Jyotis' question:
With an interest premium, rates are higher, so consumers borrow less (as the laws of supply and demand would predict) and the economy is therefore slowed in a way that is bad for our unemployment rate.
Anna Mayzenberg 5th Period
1. How does someones payment history affect their purchasing power in a time of falling prices?
2.Answer to Anna's question:
Redistribution of wealth has negative consequences because lenders will lose out if inflation spikes, but borrowers will benefit and visa versa.
Jenina Bianty
Period 5
Michelle Phan
4th Period
1. How is interest premium created and if interest premium does occur, how does it negatively affect the economy
2. Answer to Jenina's Question
During falling prices, if you were to want to request a loan, you would have to put up a collateral, but because prices have been falling, your collateral's worth is less than it was to begin with, therefore your purchasing power would not be high enough to request whatever you would want or you would no longer go ahead with the loan.
Waseem Khalil P4
1. Who is negatively affected by falling prices? Who is positively affected by falling prices?
2. Answer to Michelle's Question
Interest premium is created when inflation is unstable. To compensate for the possible loss, lenders have a higher interest rate. It is negative for the economy because it'll discourage people from taking loans and therefore further lowering the economy.
1. How does falling prices affect unemployment and inflation?
2. According to Waseem's question, people who would need loans/ want to make investments and industries who sell items would be negatively affected by falling prices because more than likely the demand would go down and lower profit, and the consumers would be positively affected by falling prices because of discounts.
Camille Trusclair 1st
1. How do inflation and deflation both create the same problem in the economy, even though they are the exact opposite of each other?
2.Answer to Camille T.'s question
Falling prices leads to people waiting to purchase goods/services due to expectations in drop of price, leading to decreased demand. Due to decreased demand, firms stop producing as much, leading to the firms to fire workers due to not making enough profit and the firms not needing as many workers due to the decrease in production. Falling prices affects inflation in that it creates an eventual deflation of the economy, basically the opposite of inflating the economy.
Mohammad Ejaz
4th Period
1) Why is CPI important in analyzing the economies of third world countries?
2) Answer to Mohammad Ejaz's question:
Inflation and deflation cause similar problems in the economy because they are both forms of instability. Inflation makes currency less valuable which negatively impacts investments and consumerism, while deflation negatively impacts suppliers and producers which will hurt the economy on a more long term basis.
Matthew Whaley
4th Period
1) Do you think other countries' inflation rates can influence America's inflation rate?
2)Answer to Matthew Whaley's question:
Because CPI allows us to analyze what a country's average prices are on goods and services, we can use this CPI on third world countries to see how their standard of living is like and whether their economy is doing well by assessing whether they are going through periods of inflation or deflation. We can see how much assistance they may or may not need for their economy and if these countries are being developed through out time.
Cassie De Leon
4th period
1. What do you think the long-term effects would be if prices stayed the same on everything for a decade? (No inflation)
2. Answer to C Deleon's question :
I think it is possible that other countries' inflation rates influence inflation rates in the U.S. if it it somewhere that America trades with or we are buying goods from that country. The more expensive it is to buy from other countries, the prices will have to go up in America in order for a profit to be earned.
^^^ Danni Hertel
Period 1
1) What types of people does inflation impose a large burden on?
2) Answer to Cassie Deleon's question:
Yes, because inflation affects exchange rates and this can influence Americas inflation rate. This may affect America's inflation rate because of the value of one currency. America must accommodate all financial interactions based on how much the American dollar is worth compared to another country's currency.
Charli Escobedo
Period 4
Crystal Obaretin, Period 1
1. How do inflation and unemployment directly/indirectly affect each other?
2. Answer to Charli Escobedo's Question:
The biggest losers due to inflation are those willing to lend money. Inflation affects them especially hard because the prices of things they buy go up while their income stays the same. In addition, the poor are generally renters so they don’t even benefit from a “cheaper” mortgage while they are paying higher prices for their groceries
1. What are the effectiveness of monetary policy in controlling inflation?
2. Answer to Charli Escobedo's question:
If someone's income does not go up as prices rise, they are the ones that are mostly affected by inflation. This causes them to spend less money and the demand of the good will fall.
Jibin Philip
2nd Period
1. How does an increase in the inflation rate affect the real interest rate and the nominal interest rate?
2. Answer to Crystal Obaretin's question:
As inflation increases, the unemployment reduces, whereas low levels of inflation increases unemployment.
Tom Joseph
4th Period
2. Answer to Crystal Obaretin's question:
As prices rise, people spend less money on goods, less spending equals less demand, and less demand means businesses might have to cut back, which will result in unemployment.
Jibin Philip
2nd
2. Answer to Tom's question:
Real interest rates fall as inflation increases, unless nominal rates increase at the same rate as inflation.
Jibin Philip
2nd
1) If prices are jumping all over the place, how may it affect borrowers and lenders?
2) Jibin Philip’s question: Monetary policy is the process which the central bank, or any other authority of the country’s economy, controls the supply of money. Sometimes an inflation rate or interest rate is necessary in order to ensure price stability. This policy pays a vital role in controlling these inflation rates ( the talk about not too cold, hot, or unpredictable ), so the effectiveness is a sustainable economic growth.
Meryem Pecen
1st period
1. Is changing the federal funds rate an efficient way to create shock absorption? Or can there be a better way?
2. Answer to Meryem's question:
Borrowers may lose or gain more profit as inflation jumps all over the place, leading them to have an interest premium, this lowers the tendency for people to take loans, which slows the economy, and ultimately leads to jobs being lost.
1) What is one possible way you can tell the price of an item is going up by inflation or by the resources needed to make that product?
2) Answer to Alvin Saji's question: The fed has limited options when the federal funds rate is close to zero, as it is now, so they have limited ways to create shock absorption. The best idea when Federal fund rates are at zero are government programs to compensate for the fed not being able to lower rates below zero.
Period 4-- Sarah Sultan
1) How might a deflation rate impact a person who lives in a place that has a high cost of living?
2)Answer to Alvin's question: Changing the federal funds rate is indeed an efficient way to create "shock absorption" for the economy. Since the federal funds rate controls the levels of reserves for all banks by law, it is the most practical way of organizing and controlling the economic shocks that were mentioned in the video.
Erik Shoga
Period 2
1) How might a deflation rate impact a person who lives in a place that has a high cost of living differently from a person who lives in a place with a lower cost of living?
2) Answer to Sarah's Question: Inflation is the overall rise in prices for all products in the economy. Therefore, to see whether a price of a product is increasing based on inflation or by its input resources, you would have to compare the prices of other products in the economy as well.
Erik Shoga
Period 2
1) How does positive and negative inflation effect when people buy things from the store?
2) Answer to Erik's question: the impact deflation has on people who live in places of high cost would not be able to afford something that people in a low cost living place reside. The prices will go down, however the people who live in high cost places will still be unable to buy certain things due to prices.
Kyra Sowells
2nd period
1) How does negative inflation effect scarcity?
2) To answer Kyra Sowells' question. high inflation would make people buy less from the store because prices would go up and they would no longer be able to afford to buy more. However, when there is negative inflation, people will buy more because the prices are lower and thee are able to afford more of what they desire.
Natalie Dye, Period 5
1) What is the impact of falling prices and wage stagnation on existing debt accumulated?
2) Answer to Natalie’s question: Negative inflation affects scarcity by decreasing the amount produced. When companies make less money, they are forced to cut costs which often leads to less production.The only time negative inflation can work without negatively affecting the rest of the economy is when businesses are capable of cutting production costs in order to lower prices.
Shweta Mathews, Period 4
1) If minimum wages increase, does it affect the inflation or deflation rate?
2) The impact of falling prices and wages, it impact existing debt as it does not allow people to pay off their debts. With the people getting fired and not getting a paycheck, they are not allowed to pay off the debt they own so the existing debt just keeps increasing and increasing.
Abin Manuel
5th Period
1) How can variable prices lead to less people borrowing money from banks?
2) To answer Abin's question, an increase in minimum wage would lead to an increase in inflation because there would have to be an increase in the amount of money in circulation by the government to raise minimum wages, which lowers the value of the dollar, which would increases the overall prices of goods.
Ashish Singh
1st Period
1. How do falling prices have a negative impact?
2. Answer to Ashish's question: When rates are higher, people tend to borrow less from banks. The rates become higher when there is variable prices which are uncertain.
Raina Abraham
5th Period
Rayomand Hormuzdi
Period:1st
10/20/2017
1)How does the Drawing Board explain the analogy between Goldilocks and the economy?
2)To answer Ashish Singh's question I will explain why variable prices lead to less people borrowing money from banks. when prices are not constant the banker compensates for the randomness of prices of goods by vastly increasing the interest rate on the money lend giving the banker a constant profit therefore causing less people to take loans because they feel its not a fair interest rate.
2)to answer Raina Aberham's question I will explain why falling prices have a negative impact. Falling prices have a negative impact because when prices constantly fall people will save their money believing the price will keep on falling so they can save more money and if enough people do this it leads to less demand which leads to an abundance of product which leads to people getting fired therefore having a negative impact in our society.
1. Why do unstable prices seem to have a snowball effect on the consumers?
2. To answer Rayomand's question, the drawing board emphasizes that there are situations when prices are too low and too high; they both have very negative effects, so they are not ideal, and it is important to keep the price stable, just like having warm porridge.
Jeff Kue
2nd
1) Answer to Rayomand's question: Like the goldilocks analogy when the prices are too "hot", the economy works best when its just right, if inflation is too high people do not spend enough and demand and supply decrease for goods so people lose jobs. If inflation is really low or prices are too "cold", then people dont spend as much because they expect prices to lower in the future, which means less production and people become unemployed.
My question: why should we be spending instead of constantly waiting for the prices to lower?
1) Answer to Sena's question: If there are enough people waiting for prices to fall, it could slow the overall economy. Demand for products would go down, then businesses slow production and start cutting back, which could lead to people losing their jobs.
My question: How do variable prices affect the relationship between lenders and borrowers?
1. Why are low and stable inflation rates hard to produce?
2. To answer Jeff K’s question, unstable prices have a snowball effect on the consumers because at first it starts out as a small impact and then slowly starts to build up bigger and bigger as it begins to become a significant one. If prices rise across the board and you are obtaining a fixed income, then the amount and what you can purchase begin change as well. As a consumer you purchase less, which then lowers the demand of certain goods and services creating a problem for workers who then get laid off as a result of a business trying to stay on their feet. On the other hand, if prices are assumed to fall in the future, consumers will then delay purchasing goods and services. If many people have this attitude, then again it effects business and their production by slowing it down causing them to let go of workers. Therefore, in both scenarios unstable prices have a snowball effect in the economy ending with a major impact on consumers.
Lauryn Weller
4th period
1) answer to Jessica's question, the variable prices could cause uneven distribution of wealth between borrower and lender. The price jumping could cause one or the other to make more or less money than predicted due to unstable prices. This usually causes lenders to raise rates just in case.
My question: What is the relationship between debt and the inflation rates rising or falling?
Bryce Del'Homme
5th
Answer to Sena's question: We should be spending instead of constantly waiting for prices to lower, because if enough people have the same mindset as you to constantly wait for prices to drop and hold back on purchases, it could slow the overall economy, which could lead to demand for products to drop, which then leads to businesses slowing down and holding back, which can lead to the possibility of people losing their jobs.
My question: Why is having prices that are variable and uncertain worse than having inflation that's too high or too low?
Ashel Jaimon
Period 4
Janice Wilson - Per.5
1) What occurs in an economy that is "too hot"?
2) Answer to Ashel's question: When prices are jumping around, many lenders raise their prices to compensate for the chance of a rise in inflation. This leads to borrowers borrowing less from the lenders, resulting in the overall slowdown of the economy. The economy slowing down leads to demand for products would going down, then businesses slowing production and cutting back, which could lead to people losing their jobs.
1. Why is it so important for the economy to maintain stable prices?
2. To answer Lauryn Weller's question- It is difficult to maintain stable inflation rates and low ones because the economy is constantly moving and changing. Because of this, big businesses want to charge more for their goods if the cost of the raw materials change or go up. Since many businesses tend to share raw materials, when the prices of those raw materials go up, many business will raise prices. For example, if beef prices raised, not only would McDonalds change their price, so would Burger King, Sonic, and other large restaurants.
Kenneth Easo
4th Period
1.Explain whether high inflation is good or bad for the economy
2. To answer Kenny's Question: The inflation rate below but close to 2% is low enough to allow the economy to benefit fully from price stability. This is important to keep the nominal interest rates above zero.
1. How are consumers affected by the falling of prices?
2. Answer to Joel's question: High inflation is bad for the economy because it makes the running in business more unpredictable. If you are on a fixed income, your purchasing power erodes and therefore, you will probably spend less. If you spend less, there is less demand for goods and services which can cause people to lose their jobs.
Aleena Mathew, 1st period
1. How can consumer expectations of the future slow the economy during periods of deflation?
2. To answer Janice Wilson's question, when the economy is "too hot" it can cause consumers to purchase less because those on a fixed income would have a lower purchasing power resulting from the excess inflation of the economy.
Radhika Daru
period 5
Sahil Shah
Period 2
1. Why is price stability and maximum employment 2 sides of the same coin?
2. Answer to Radha Daru's question - A consumer will believe that prices will keep going down and halt their purchases because they think they can get a better deal in the future. When they do this, the economy doesn't move along and it can lead to businesses cutting back production.
1.How can making the wrong guess about what is driving up prices have a negative impact?
2.Answer to Sahil Shah's question: If prices are rising too rapidly and income does not, purchasing power erodes, and people spend less, demand decreases, which prompts businesses to cut back, causing people to lose their jobs. This is how price stability and maximum employment are closely connected, which is why they are referred to s two sides of the same coin.
-Elaine Thong
-2nd period
1.what causes collateral of getting a loan not worth as much as it once was.
2.Answer to Radhika Dare question, Consumers would wait for deals instead of buying it now and this slows the economy down because consumers are not purchasing anything. And this could lead to people losing their jobs.
Erin Randle
Period5
1. Why do bankers increase interest premiums even though it slows down the economy?
2.Answer to Tiffany Lee's question: Decreasing prices causes money to not be worth as much as it used to, meaning when you try to get a loan, your collateral might not be enough to secure it.
Bryan Ta
4th Period
Emily Tran
Period 2
1. What are some possible downsides for a rapid increase in the economy?
2. Answer to Bryan question: banks increase interest premiums even though it slows down the economy to keep things stable. The economy wouldn't be stable if things were moving too rapid or falling thus called the bubble effect.
1. How does keeping prices stable affect people in the long run?
2. Answer to Emily Tran's question:there can be an increase in pollution because there is an increase in manufacturing and an increase in producing more goods. Along with this, there can be a surplus of goods, however prices will decrease, resulting in a deficit in profit for companies.
-Rithvik Bommareddy, 4th period
1. What makes it so hard to maintain a stable economy?
2. Rithvik's question: Keeping prices stable can allow for stable wages and a stable growth of economy. In the long run it will benefit us because it does not allow us to go into recession and it will keep us growing steadily.
Shane Samuel
1.)How do bankers determine to whom should they invest in, and why should we partake in loans from banks if it cause increases debt and financial burden nationwide?
2.)Jeremiah John’s Question: When inflation is low and reasonably stable, people do not waste resources attempting to protect themselves from inflation. They save and invest with confidence that the value of money will be stable over time. There is also an Uncertainty about the price level makes it difficult for firms and households to determine whether changes in individual prices reflect fundamental shifts in supply and demand or merely changes in the overall rate of inflation. This uncertainty is one of the reasons as to what makes is difficult to maintaining a stable economy.
1) What happens when you have Less purchasing power?
2)To Shane's question: Bankers determine who they should invest in when the interest premium rates are higher so therefore the consumer will borrow less. if inflation falls then lenders make more while the consumer loses. Many people partake in loans to achieve a better interest rate.
1. If prices fall in the economy, do consumers benefit or take a negative hit from it?
2. Shane Samuel's question: The investment banker acts in a capital markets advisory capacity to corporations and governments, rather than dealing directly with individual investors. Investment bankers help their clients raise money in the capital markets, provide various financial advisory services, and assist with mergers and acquisition activity. We partake in loans from banks because they more reliable than private loans. Private loans aren't as good a deal anymore; most are variable rate loans that require a co-signer and are difficult to qualify for. So it doesn't take a rocket scientist to see why most kids take out federal student loans from the Department of Education now, and leave the bank loans as a last resort.
Steve Raju
5th period
Period 2
1. If unemployment and slower inflation rates go together and if the feds effectively prevent slower inflation rates, why is there still so much unemployment?
2. Steve: Consumers benefit from lower prices in the short term; however, lower priced goods can create either a consumer surplus or consumer scarcity, which both hurts the suppliers. In any case, lower prices make consumers lose their own jobs and work to make other payments harder to fulfill.
Aylin Sanchez
2nd Period
1.) What happens when the economy is too hot (high) and too cool (low)?
2.) McAnthony Benson-Okey's question: Probably the reason why there's still so much unemployment are because of frictional, structural, and cyclical unemployment. Many people tend to be unemployed since most companies have technology that can replace them. As well as having to laid off people when entering a recession. And also because some people are just employed for a short term.
period 5
McAnthony Benson-Okey question- There is still high levels of unemployment because inflation is not the only factor that correlates with unemployment. For example, many are unemployed due to not having the education or the opportunities to get a job.
-what factors contribute in making a mixed market economy like the USA successful?
Jubin Joseph
Period 5
1). Based on the state of the economy now, Is it possible that inflation is playing a key role into the rise of the economy as we speak or could it be due to the fact that unemployment is at its all-time low at this moment?
2). Alyin Sanchez - When the economy is "hot", the inflation rate is high resulting in higher prices overall for almost everything. When it is "cold" the prices are too low, which results in cutoffs in businesses and more unemployment.
Jerry George
Period 2
1. Are Interest premium and inflation related? If so, how?
2. Jubin - Inflation and unemployment are at an all-time low right now, therefore both contribute to the economy rising right now.
1. Explain why there are so many factors that go into maintaining a stable and healthy economy.
2. Jerry George: Yes, Interest premium and Inflation are related. If Inflation is unstable, lenders tend to raise Interest premium in order to compensate for the wild Inflation in order to prevent the loss of money.
Cameron Walker
Period 4
1. How does inflation act as "shock absorbers" in the economy?
2. Jubin Joseph's Question: As illustrated by the video, inflation, and unemployment rates are two sides of the same coin. Hence it is only natural that both of them are sinking low in this growing state of the economy. However, both inflation and low unemployment rates are results of the smart economic decisions taken by the government and the big businesses of the country in the free market. These decisions are the actual driving cause behind the growth of economy and inflation and unemployment rates are simply its results.
Rakesh Johny
Period 1
1.How do unstable prices affect the relationship between borrowers and lenders?
2.Rakesh Johny: Inflation acts as shock absorbers because it gives the Feds the option to lower the Fed Funds Rate to spur the economy. If inflation is close to non existent, then the fed fund rates are also close to zero, so if there is a shock in the economy the feds are left with no options.
Natalie Romero 2nd
Shiv Patel
Period 2
1. How does the stability of the economy affect the demand for goods and services?
2. Cameron Walker's Question- There are many factors that go into maintaining a stable and healthy economy because everything that happens in the economy has an effect. For instance, inflation leads to a decrease in demand for goods due to the reluctance people have in buying expensive products. This leads to a decrease in production, which leads to people being fired. The same goes for deflation in that people do not buy products in hopes of finding a better price in the future, which decreases demand, which decreases production, which, again, leads to people being fired.
Sang Kirsten Ebueng
1. How are consumers affected by unstable markets?
2. Shiv Patel's Question- if markets seem stable and prices continue to fall at a steady rate, people may hold off buying durable goods. If enough people have the same mentality to hold off buying goods for a long enough time, demand and production of goods and services could go down.
Sang Kirsten Ebueng
Period 2
1. How are consumers affected by unstable markets?
2. Shiv Patel's Question- if markets seem stable and prices continue to fall at a steady rate, people may hold off buying durable goods. If enough people have the same mentality to hold off buying goods for a long enough time, demand and production of goods and services could go down.
1.How are inflation and unemployment related?
2.Consumers are affected by unstable markets because it’s more dangerous to buy something when the market isn’t good so people wouldn’t spend money but when the market is stable more and more people will come out buy
Zoheb Khawaja 5th
1.What happens to an economy when the prices are uncertain and jumping up and down.
2. Sarika Vura's question: There is an inverse correlation between inflation and unemployment inflation is supposed to be low when unemployment is high, vice versa relation.
1. Is high inflation bad or good for the economy
2. When prices fall we take a negative hit
Kale Wicks
Period 4
1.- Is it harder to pay off debt when business are cutting cost or keeping them the same? Why?
2. Daniel Martin's Question - High inflation is bad for the economy because with the rise of prises, the demand for goods will decrease leading to a loss in money in the economy, leading to unemployment and other problems.
Alwyn Joseph
5th period
1)Explain how wealth can be re distributed between buyers and lenders with an example.
2) Kale Wicks question: It is harder to pay off debt when businesses are cutting costs because you are relieving less salary as a worker, meaning you have less income, leading to having less money to pay off a debt.
Stephen Kelly
Period 4
1. How does the the effect of inflation play a crucial role in the calculation and ranking of of nation's GDP and its health?
2. Alwyn Joseph question: Wealth can be distributed between the buyer and lender when the the price of a item becomes less than the when bought, causing the buyer to pay less having more money, and the lender not losing anything.
Sainath Krishnamurthy
Period 4
1) How are the US economy and national debt related?
2) Stephen Kelly - Increased production leads to a lower unemployment rate, further increasing demand. Increased wages lead to higher demand as consumers spend more freely. This leads to higher GDP combined with inflation.
Wesley Cherry
Period 4
1) What are the negative effects of redistributing wealth between borrowers and lenders? How is this redistribution caused?
2) Stephen Kelly's Question: The increase in price levels indicate a false sense of growth in the economy. A higher GDP without accounting for inflation may not show growth in the economy as opposed to an increase due to price levels. This means a country with 0% real GDP growth may have a higher nominal GDP due to inflation.
Wesley Cherry
Period 4
My screen did not refresh in time to see the post before mine. Here is my new post
1) What are the negative effects of redistributing wealth between borrowers and lenders? How is this re distribution caused?
2)The national debt reflects the united state's inability to pay its loans. This may decrease the ammount of financial support the U.S. Ia able to gain from other countries and make it harder to stop a decline in our economy
1) what are the benefits of deflation even though in the video it says deflation can lead to a low economy
2)Negative effects are that if equal amounts of wealth between borrowers and lenders the economy will not grow since there will be no difference in the money flow, redistribution is caused by distributing a good that was already in the process of of being out to the public
Yash Parmar 5th
1. Could rise and fall of inflation be estimated with change in GDP?
2.Wesleys question
It can cause a collapse of the system because people can irrespons
ibly spend or make bad investments.
Aileen Ramirez
1st period
1)Question: What is the benefit of lowering the fed fund rate?
2) Isaiah's question: the benefit to deflation would be lower prices for consumers (for a short amount of time since wages will eventually be lowered as well).
During a time of recession, would it be a wise decision to buy products that now have lower prices? Why or why not?
Yash Parmar question: GDP calculates and includes inflation, which provides a faulty estimate to the economy of a nation. Accounting for inflation to find the real GDP, which basically subtracts the effects of inflation, allows for a better understanding of the conditions of an economy.
During a time of recession, would it be a wise decision to buy products that now have lower prices? Why or why not? (Sarah Faraone)
No, because the more money that someone puts into the economy (buying higher priced goods) leads to more money being circulated throughout the economy and faster recovery rates.
Question: Why is adjusting for price necessary to calculate a more comparative form of GDP, and provide an example comparing the economy in the 50's to the economy now.
- Kedar Pandya 2nd Period
Sydney Sandford
Period 4
Question:What makes running a business unpredictable?
Answer to Sarah Faraone question: It is wise for the customer to buy and a time or recession but not wise for the company because they are losing money
Question: Why don't banks adjust their interest rates each year according to the inflation rate, most likely through percentages?
Answer to Sydney Sandford's question: running a business is unpredictable because there are many variables that influence the supply and demand which will affect profits or losses. Many people put a lot of money into an idea and lose it all, while others gain it back, and then some.
Robert Slaybaugh
4th Period
Jackson Stanley
4th Period
Question: What is an alternative way to detecting the difference between good business and inflation?
Answer to Rob Slaybough's question: Banks don't adjust their interest rates each year to inflation because any debt accumulated or initial loans and collateral does not change as prices change. The investment stays the same.
Question: How would the theory of the Invisible hand relate to whether the economy is too "hot" or "cold"?
Answer to Jackson Stanley: You can use statistical models to predict the rate of inflation in the future but its hard to tell.
Sanyoni Desai
5th period
Ronald Hood
2nd Period
Question: Why would lenders increase their interests rates if prices in the market become erratic?
Answer to Sanyoni Desai: When an economy becomes too hot the invisible hand forces companies to stop hiring and begin firing people due to the decrease in purchases. Similarly, the invisible hand will begin to force unemployment if the market becomes too cold because people will stop consuming if they expect the prices to fall.
Justin Kuzhippil
Period 5
Answer to Ronald's question- Lenders may increase their interest rates when prices in the market become erratic because the prices become unpredictable, and certain lenders are willing to take the risk of making change whether that results in a positive one or negative.
What types of risks do financial institutions face?
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