Econ 104 HW Assignments - ECON HW#1 1 1 3 6 2 Yes 3...

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ECON HW #1 1) 1, 3, 6 2 Yes 3) Creating more inflation by increasing the money supply would cause real interest rates and the value of real estate to drop, according to the reading. The financial crisis couldn’t solely be fixed using taxpayer dollars; therefore, more inflation would allow more money to flow into the economy to aid the system at hand and add to the taxpayers’ dollars. Because of these reasons, the author argues for more inflation. The author believes that raising the inflation will help our economy recover. In addition, it is important to keep an eye on inflation and make sure that it doesn’t reach double digits. If all goes well, this could potentially help the economy in the long run. 4) As other countries get richer and become more innovative, more job opportunities will become available in the United States. Export markets have grown quickly towards the developing world, and more Americans are employed from this due to the services and goods to the emerging markets. 5) Inflation rate, as measured by the GDP deflator, usually drops in most recessions from the graph. Despite some small increases, inflation decreases more often than it increases. You can see that even when the inflation rate increases a lot, like in 1975, it still manages to decrease again afterwards.
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