Chapter 19 Reflection

1. What is the market of loanable funds?
Adequate response: It is the place where everyone goes to deposit their money into their savings.
Very good response: The market of loanable funds is where people go to deposit money into their savings and where borrowers go to get their loans.

2.Why does net capital outflow equal net exports?
Adequate response: This is because the purchases and sale of capital assets abroad is the same as the exports and imports of goods and services.
Very good response: Net capital outflow is equal to net exports because the imbalance between capital assets in other countries is the same as the imports of goods and services to the U.S. from other countries.

3.What is a trade policy?
Adequate response: Is a government policy that influences what is imported and exported from a country.
Very good response: A trade policy is a government policy that affects the quantity of goods and services that a country imports and exports. 

Chapter 18 Reflection

     My first favorite margin note in this chapter was converting marginal product of labor to show how much a worker can create. This shows that even if one product may not cost much if a worker produces 100 more the revenue greatly increases. Second is finding the value of marginal product by seeing that when output prices change it also changes the value of the marginal product as well as the labor-demand curve shift. I like this comment because it shows that one piece changes all parts of the equation in different ways and when you want to change one thing you really need to be looking at the parts it will affect. Last is that with a diminishing marginal product means that their is a abundant supply and a low marginal product or low price. This shows that when a company makes too many of one product it actually lowers the price of the good.

Chapter 17 Reflection

     The costs of inflation include hyperinflation, shoe leather costs and menu costs that all play crucial roles in different ways. Hyperinflation is when a country has a very high and usually accelerating inflation and smaller money becomes worthless. Shoe leather costs is when a countries inflation rate encourages citizens to get rid of their money holdings. Last menu cost is when a company is constantly changing its prices to every small aspect they change. I think that the most important is shoe leather costs because it can deplete a countries wealth very quickly if many citizens quickly get rid of their money holdings and cause a quick and big inflation rate. 

     Deflation can lead to falling prices and in turn causes companies to lay off workers and cut pay to others. It would be a problem for all those who take part in the economy because as prices fall and pay falls unemployment rises and the poor get poorer and the rich also begin to loose some of their wealth. It also would cause less demand for specific goods and services because people will not want to spend the extra money with their wages going down.

Chapter 16 Reflection

     Cash I important to the overall money supply because cash helps the banks to increase the money supply buy giving loans with an interest rate to increase the flow of money back into the bank. As well without cash you could not have credit or debit cards which would collapse the overall money supply.
     The Federal Reserve Board and the Federal government are related because they both use the open market to increase or decrease the money supply. By selling bonds to the public the money supply will decrease on the other hand if they buy bonds they will increase the money supply.

Chapter 15 Reflection

     There will always be at least some unemployment for several reasons such as different industries fluctuate through the different seasons and may have to lay off a few employees in a certain season. Another is that some people don't want to work especially if they are receiving something like welfare that gives them a small income and they don't have to work.

      Public policies can affect the amount of unemployment in both good and bad ways. A good way would be the government creating a program that helps people to find the jobs they want to be in and better trains them for the job. On the other hand they can affect unemployment for the worse such as if the government raises the minimum wage too much which causes companies to lay off less skilled workers to try and keep the best of their workforce with the higher wages.
     Unions can affect unemployment as well by raising the wages of worker above the equilibrium point. This causes the demand for quality labor to decrease and therefore results in higher unemployment when they were trying to help all in the union.

Chapter 14 Reflection

      One trade-off that I have had between risk and return is with gambling at central city. The higher the potential winnings the higher amount of money you risk to win. This often makes me stay to lower cost games where I have less risks of loosing money however the return is not as good as the higher risk games.

     The present value of a dollar is more valuable than its future value can be shown with the example of buying a new car. If you buy a new car the minute you drive it off the dealership lot the price of the car decreases. As well as you put miles on the vehicle and have it for a few years the value will continue to decline as newer and better versions continue to come out that people want more.

Chapter 13 Reflection

     Private savings impacts investment with people putting money into their savings accounts the bank is able to lend out more money for other people invest in a new business or things they need. So the banks need to have money from others savings accounts to be able to lend money to people that will pay the money back plus some interest. It is important for people to save money in an economy because their saved money helps to keep the economy healthy. Without people saving money the economy could begin to dwindle and this could lead to a depression.

     Public policies like tax policies affect saving rates in either good or bad ways which will either encourage people to save or discourage them from saving. An example of a tax policy that will encourage saving is a policy that encourages economic growth that raises revenue without hurting those who are putting their money into savings. A example of a tax policy that discourages savings is such as having to pay double taxes on certain savings accounts such as IRA's. Government budget deficits affect interest rates because when the government spends more money than they make from taxes the country continues to pile up debt. As the debt continues to climb so do the interest rates to provide a better return since the risk continues to climb.