Due Thursday 

Respond to the following in a minimum of 175 words:

  • Innovation and physical capital are 2 of the 4 factors of production. Discuss some specific ways that 1 of the following laws increased the productivity of 1 or both of these factors of production:
  • 1862 Pacific Railway Act
  • 1956 Federal Aid Highway Act
  • 1946 Federal Airport Act
  • What other examples of economic concentration can you share?
  • What are the risks and advantages to economic concentration?
  • How has economic concentration influenced your industry?

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Due Thursday 

Respond to the following in a minimum of 175 words:

  • Discuss how changes in the Federal Reserve’s monetary policy affect at least 1 of the 4 components of GDP (consumption, investment, government spending, net exports).
  • Have the Federal Reserve’s countercyclical monetary policies been effective in moderating business cycle swings? Justify your response.

Due Thursday 

Respond to the following in a minimum of 175 words:

  • Can government intervention in markets sometimes make the situation worse? Provide examples in your response. For example, consider the progress of the economy of Venezuela since 2000.

Due Thursday 

Respond to the following in a minimum of 175 words: 

  • Discuss non-monetary benefits open trade has contributed to the world since the end of WWII. Provide at least 2 examples. Why do you think these are important?
  • How have changes to US trade and tariff policies affected US trade with other nations? Consider recent (less than 2 years old) credible news sources to support your response.

Due Thursday 

Some politicians, labor unions, and special interest groups argue that US trade deficits are harmful to the economy and nations that run large trade surpluses with the US are benefiting from unfair trade practices and agreements. These parties support increasing tariffs on imports, elimination, or re-writing of trade agreements.

Respond to the following in a minimum of 175 words:

  • Discuss what credible economists say about the effects that tariffs, changing trade agreements, and/or manipulating exchange rates will have on the total US trade balance.
  • Do you agree with their assertions? Why or why not? 

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Discussion Posts

Response 1

            From the two, physical capital is the only factor of production. Physical capital is in the form of tangible materials that an entrepreneur invests or buys to produce a particular commodity. Both physical capitals and innovation increase productivity, thus fostering economic growth. Innovation is not a factor of production; instead, it is a factor of economic growth (Silver, 2019). There is no direct relationship between innovation and the resources needed in production. Innovation works bests through total-factor productivity. Therefore innovation is indirectly related to factors of competitive development of products. 1862 Pacific Railway Act increased productivity because it allocated land, which is a factor of production. The land was used to recompense for the construction of a railroad. 

            Big companies increasing the gain of the market share is an example of economic concentration. Also, when top companies lose influence on market production to small organizations are another example. Economic concentration risks are inclined to high pricing, with the competition is advantageous because it leads to lower prices and quality products. Economic concentration in the transport sector has influenced the service’s availability, capacity, reliability, and cost.

 Response 2

           Changes in the Federal Reserve’s monetary policy influence consumption by affecting aggregate demand for goods and services. Policies touch on employment and household earnings, which determine how consumers spend on goods and services. It also focuses on how consumers invest their money. The Federal Reserve’s countercyclical monetary policies have been less effective because households are susceptible to job losses (Losev, 2016). Even though the policy was meant to boost outpour and create opportunities by increasing the money supply, it does not serve its purpose of solving long-term disturbances to output. Other than stimulation growth through interest mechanisms, the public is subjected to inflation and financial instability. The economic growth stimulation program is flawed; boosting the money supply is quite lengthy, leading to inflation and currencies becoming weak. They cannot be used to address stagflation. The Federal Reserve’s countercyclical monetary policies are associated with time lags. During the recession, the policies are usually ineffective. They also contradict the government’s objective. 

 Response 3

           Even though government interventions control market inequalities, some of the problems are better left to auto-correct themselves. The assumption that government decisions are always genuinely right and unfailing is flawed because they are subject to make wrong decisions. Even though governments desire to promote economic fairness and address market issues, the interventions do not work out; instead, more significant problems yield. Government interventions lead to an inefficient division of resources. Governments are liable to be influenced by politics, thus worsening the market (Liu & Woo, 2018). Government intervention deprives people of the freedom to choose what works for them. The market is better positioned to determine how and when to produce. Governments always prepare for their downfall. It is irrational to believe that faulty governments will always fix market problems. The United States of America has implemented improper interventions by violating some of its citizen’s rights. The government imposes high import tariffs on goods from China. Businesspersons have to spend extra time, effort, and money to import commodities, hence pushing consumers’ price burden (Liu & Woo, 2018). Again exporters suffer because the demand for the commodities decreases. Some industries or businesses are forced to pay their employees a high wage than what the market can bear. As a result, enterprises suffer, recording small or no profits. Some workers are even laid off to cut costs. 

Response 4

           The world has moved to an open trading system, which has come with numerous benefits such as greater consumer choice, lower prices, the formation of multilateral trade institutions, and higher income levels (Gnangnon, 2018). America is one of the beneficiaries of open trade. It has moved from an idle economy to create numerous jobs. The industrialization has increased, and the GDP rose. Japan is another beneficiary of open trade. The country implemented the dodge plan, which led to a rapid increase in production and economic growth.

           President Donald trump import tariffs is geared towards fulfilling the “America first” initiative. Trump’s policies have spiked trade wars with China, thus affecting investments and the stock market. The president seeks to revisit his policies after the 2020 elections. The import tariffs are geared towards reducing the trade deficit by discontinuing multilateral free trade agreements in favor of bilateral trade agreements. Trumps’ import tariffs have shaken the United States trade levels. Businesspersons have been forced to avert importing from china. They are looked for new supply chains that are cost-friendly. However, trade between the two countries has reduced. Consumer options have decreased due to the unavailability of products and increased prices. 

Response 5

The United States’ largest deficit is with its nemesis china. Trump’s initiative of “buy American” has reduced the deficit (Cunningham, 2019). However, renegotiating trade agreement does not create jobs as Trump administration believes. The united state economy is still sound and healthy. Trump administration should not be forced to win the trade war with China. The objective of having a sustained trade deficit is merely political (Tankersley, 2018). Cutting the trade deficit will not strengthen the economy as the government alleges. The only problem is that there is a discrepancy between savings and investment rates (Tankersley, 2018). The United States is acquiring more imports than it is exporting. Those who support increased tariffs on imports or redesigning of trade agreements are genuinely right. China and the united should strike a bilateral deal to make up for the shortfall. Reduced importation would reduce jobs in America and stagnate job development in international trade. U.S. politicians opt for borrowing money from international creditors or open doors for investments from foreigners.

References

Cunningham, R. O. (2019). Leverage is everything: understanding the Trump Administration’s linkage between trade agreements and unilateral import restrictions. Case W. Res. J. Int’l L.51, 49.

Gnangnon, S. K. (2018). Multilateral trade liberalization and economic growth. Journal of Economic Integration33(2), 1261-1301.

Liu, T., & Woo, W. T. (2018). Understanding the US-China trade war. China Economic Journal11(3), 319-340.

Losev, A. (2016). Countercyclical Policies. Russia in Global Affairs14(3), 70-8.

Silver, D. (2019). Alienation in a four factor world. Journal for the Theory of Social Behaviour49(1), 84-105.

Tankersley, J. (2018). Trump hates the trade deficit. Most economists don’t. The New York Times5.