An increase in the minimum wage can affect the economy in several ways. First, an increase in minimum wage will put more money in the pockets of consumers, especially lower income consumers who are less likely to invest additional income. This can be positive for the economy because it means businesses will be generating more income.
It also means that businesses have to invest more ...
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Most people attribute the cause of the Great Depression to the stock market crash of 1929. The day the stock market collapsed is known as "Black Tuesday". After the stock market crashed, it led to a decrease in confidence in the economy and in turn created an even deeper depression.
There are several theories about why the stock market collapsed in 1929 all of which have to do with ...
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The equity premium puzzle is a term coined by Rajnish Mehra and Edward C. Prescott in their study entitle "The Equity Premium: A Puzzle". It is a phenomenom not entirely understood in the financial world. Those seeking to understand the Equity Premium Puzzle are trying to determine why stocks have such higher real returns compared to government bonds.
Other countries have experienced ...
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The theory of an endogenous money supply is based on the idea that money is generated in an economy based on the needs of that economy. The banking systems then adapt the short term interest rates to ensure stability. An endogenous money supply allows the forces of supply and demand to determine to progression of the economy rather than external forces such as a banking system like the ...
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There are two main reasons why the government cannot just print more money to make everyone rich. The first reason is that there used to be a gold standard, meaning that for every dollar in the economy there was actual gold to back that dollar, so that if needed, cash could be traded for gold, in theory.
We do not function on a gold standard anymore but our cash still needs to ...
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A full employment U.S. economy would be nearly impossible to reach. I think we could get within a percent or two, but zero unemployment would be an unrealistic goal. In theory, if every person in the U.S. who could work was working, the economy would be stronger. The government would not have to pay unemployment benefits to anyone, welfare payouts would be low or non-existent, and businesses ...
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An aging and slow growing population can have very negative effects on a country's economy. Japan is a great example of this type of effect. As the population ages, elderly citizens require more care, which is expensive. With a slow growing population that means there are fewer people to take care of an aging population.
This can make it harder for some able-bodied people to work if ...
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The United States has a higher average household income compared to Saudi Arabia, but the gap between the rich and the poor in Saudia Arabia is greater than the United States. This means that rich Saudis can live lavish lifestyles at the expense of the lower income citizens.
Some of the poorest people who live in Saudi Arabia are not actually citizens but immigrants from other ...
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There are several reasons for the economic upturn in the United States since 2016. One reason is that the economy has been in an upswing as it is recovering from the recession in 2008. In the 8 years since the recesssion, the economy has been recovering. This is due to careful strategic planning at the Federal Reserve and other major financial institutions.
Another reason the economy, ...
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There are lots of things that could trigger a collapse of the United States economy, but there are also lots of safety nets in place to prevent that from happening. The Federal Reserve's main job is to protect the economy of the United States and they enact policies based on science and research that stabilize the economy.
The Federal Reserve may not be enough to protect the economy ...
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