http://online.wsj.com/article/SB10001424052748704681904576318892832969946.html?mod=googlenews_wsj
Summary
In order to head off the inflation that hit 5.3% in April, China required its banks to increase their deposit in reserves by 0.5 per cent. Some Chinese economists say that putting pressure on the banks will have variety of unintended consequences. It encourages banks to skirt the requirement by lending money out in different ways that are not covered by the regulations. This act also has negative effects on smaller banks and smaller enterprises. Econommists argue that China needs to help small firms to encourage innovation needed. Banks do not want to increase their interest rates because it would increase the cost of the bonds that the central banks sell, and also the value of Yuan. Raising interest rates could also harm huge state-owned banks due to the investments of big state lenders they invested in securities that are unprofitable.
Connection
Inflation means prices of goods goes up, this is mainly due to the large money supply that flows into the economy. Raising bank reserves is one of the ways to influence the growth of the money supply. When the bank reserves are required to increase to a certain amount, banks have less money to lend out to their customers, thus limiting the money supply flow. When people have less money on their hands, their purchasing powers will decrease. Less money will be flow into industries that are over-heating, and prices of goods will then slowly go down again.
Reflection
I think the reason why China raised bank reserves at this certain time is there will be about one trillion yuan in central bank bills will be mature in Febuary and March. When maturity date of the bills come, a huge money supply will be flow into the economy again. In order to prevent further move in the price of goods, I believed raising the bank reserves is a good decision. However, there is still disadvantages of raising the banks reserves. One of them would be lowering the money supply and decreasing the country's GDP at the same time.
Saturday, May 14, 2011
Wednesday, May 4, 2011
ECONNNNNNNNN
1. How long do you think it’s going to take to get to all virtual cards? How many years?
Why?
I think it will take around 8 years to get to all virtual cards. As the younger generations grow up, they are likely to be more trustful in this new technology in which they don’t have to always bring cash outside.
2. Who will not be on board with this new virtual wallet?
I think the older generations, which are the baby boomers, will not be on board with this new virtual wallet. Many older generations are unwilling to accept new technologies, and they believed that cash is always the best thing to keep when they go out to shop.
3. What companies are going to be affected negatively by this? Name 3.
Credit card companies, stores that don’t want to install the virtual cards system,
4. Who is going to make money from this? Name 3.
The inventor, manufacturers, banks.
Why?
I think it will take around 8 years to get to all virtual cards. As the younger generations grow up, they are likely to be more trustful in this new technology in which they don’t have to always bring cash outside.
2. Who will not be on board with this new virtual wallet?
I think the older generations, which are the baby boomers, will not be on board with this new virtual wallet. Many older generations are unwilling to accept new technologies, and they believed that cash is always the best thing to keep when they go out to shop.
3. What companies are going to be affected negatively by this? Name 3.
Credit card companies, stores that don’t want to install the virtual cards system,
4. Who is going to make money from this? Name 3.
The inventor, manufacturers, banks.
Sunday, April 10, 2011
Great Depression V.S Recession
1. How did the Great Depression start?
- The stock market crash on 1929
- Bank failures
- Reduction in purchasing
- Overproduction
- High unemployment rate
- Drought occurred in the Mississippi Valley in 1930 and caused farmers to sell their farms
- America put high tariffs to protect American companies and led to less trades with foreign countries
2. How did the recent recession start?
- Increasing oil prices
- Increase price of manufactured products
- Rise in interest rates by the European Central Bank
- Increase of unemployment rate
- People were unable to pay for their mortgages
- Bank failures
3. How the governments take part following the event? Were and are they successful attempts?
Great Depression
- Work-creation programs
- Raise tariffs to protect industries within their own countries
- Poured money into public projects
- Were not successful attempts
- It was the World War II that boost up the economy
Current Recession
- Government helped large companies that were at the edge of bankruptcy
- Lower interest rate
- Increase government spending
- Lower taxes (corporation tax)
- were successful
- less unemployment
- economy getting better
4. Internet, Media, televisions, banking, government support, better social programs, better knowledge on how to response to recession
5. The Great Depression and recent recession both decreased the United States’ GDP.
- United States is the core of the world economy
- Less money flow into the economy
- People save more than spend more
6. I think the Great Depression had more of an impact on the world. The Great Depression lasted for around 10 years. Although the recent recession is still happening for 3 years, it is unlikely that it will continue for 7 more years. A ten-year depression would definitely have a greater impact on the world economy than a shorter period of recession. The reason why I think the recent recession will not last longer than 10 years is the world economy is slowly improving as more money flow into the economy. Another reason is that governments are now gaining more knowledge in how to deal with economy recession from past experiences like the Great Depression, the 1997 depression in Asia, and etc. In that case, countries will not make the same mistakes and worsen the situation.
.
http://americanhistory.about.com/od/greatdepression/tp/greatdepression.htm
- The stock market crash on 1929
- Bank failures
- Reduction in purchasing
- Overproduction
- High unemployment rate
- Drought occurred in the Mississippi Valley in 1930 and caused farmers to sell their farms
- America put high tariffs to protect American companies and led to less trades with foreign countries
2. How did the recent recession start?
- Increasing oil prices
- Increase price of manufactured products
- Rise in interest rates by the European Central Bank
- Increase of unemployment rate
- People were unable to pay for their mortgages
- Bank failures
3. How the governments take part following the event? Were and are they successful attempts?
Great Depression
- Work-creation programs
- Raise tariffs to protect industries within their own countries
- Poured money into public projects
- Were not successful attempts
- It was the World War II that boost up the economy
Current Recession
- Government helped large companies that were at the edge of bankruptcy
- Lower interest rate
- Increase government spending
- Lower taxes (corporation tax)
- were successful
- less unemployment
- economy getting better
4. Internet, Media, televisions, banking, government support, better social programs, better knowledge on how to response to recession
5. The Great Depression and recent recession both decreased the United States’ GDP.
- United States is the core of the world economy
- Less money flow into the economy
- People save more than spend more
6. I think the Great Depression had more of an impact on the world. The Great Depression lasted for around 10 years. Although the recent recession is still happening for 3 years, it is unlikely that it will continue for 7 more years. A ten-year depression would definitely have a greater impact on the world economy than a shorter period of recession. The reason why I think the recent recession will not last longer than 10 years is the world economy is slowly improving as more money flow into the economy. Another reason is that governments are now gaining more knowledge in how to deal with economy recession from past experiences like the Great Depression, the 1997 depression in Asia, and etc. In that case, countries will not make the same mistakes and worsen the situation.
.
http://americanhistory.about.com/od/greatdepression/tp/greatdepression.htm
Wednesday, April 6, 2011
Factories powering Canada’s economy
http://www.theglobeandmail.com/report-on-business/economy/growth/factories-powering-canadas-economy/article1964616/
Summary
The Canada's economy expanded by 0.5 per cent in January due to the increased in U.S. demand, and mostly the Canadian factories. Part of that was because of a rebound in auto and parts production tied to several temporary factros, which were plant shutdowns and harsh weather. The manufacturing and exporting sectros also contributed to the economic rebound. And the sectors' growth will continuely mostly rely on the U.S. demand. While export growth and business investments are expected to push up the Canada's economy, the strong loonie and the crisis in Japan can also do so, due to the higher commodity prices and production disruptions resulting from the crisis. However, economists believe the supply chain disruptions will short-lived and it will recouped later this year. One area that's likely to get a negative effect will be the Canada's auto industry because of the high gasoline prices. It would hurt the recovery in U.S. auto sales, which directly affect Canada's auto industry since the vast majority of production is still exported to the U.S.
Connection
The article states that the GDP will mostly depends on the demand of the U.S. market, and that is what Chapter 6 talks about. When the demand from the U.S. market increases as economy improves, Canada, which is one of the major importer to the U.S, will definitely benefit from it. And in the long run, it will push up the GDP of Canada. However, since it is still at the stage of recession, people might save more rather to spend more. And this might be hard to reach equilibrium GDP.
Reflection
As the economy recover from the recession, the demand of goods will definitly goes up, which also means the supply from manufactures will also goes up. The earthquake crisis that occured in Japan will bring opportunities to the province of British Columbia. There will be a high demand of wood for construction and rebuilding the city, and since British Columbia's major export is wood, it will definitely benefit the province. However, i think the auto industry is more likely to be contiously affect because of the increasing oil price. And the major reason for that to happen is the riots and revolutions happening in the Middle East and Afirca.
Summary
The Canada's economy expanded by 0.5 per cent in January due to the increased in U.S. demand, and mostly the Canadian factories. Part of that was because of a rebound in auto and parts production tied to several temporary factros, which were plant shutdowns and harsh weather. The manufacturing and exporting sectros also contributed to the economic rebound. And the sectors' growth will continuely mostly rely on the U.S. demand. While export growth and business investments are expected to push up the Canada's economy, the strong loonie and the crisis in Japan can also do so, due to the higher commodity prices and production disruptions resulting from the crisis. However, economists believe the supply chain disruptions will short-lived and it will recouped later this year. One area that's likely to get a negative effect will be the Canada's auto industry because of the high gasoline prices. It would hurt the recovery in U.S. auto sales, which directly affect Canada's auto industry since the vast majority of production is still exported to the U.S.
Connection
The article states that the GDP will mostly depends on the demand of the U.S. market, and that is what Chapter 6 talks about. When the demand from the U.S. market increases as economy improves, Canada, which is one of the major importer to the U.S, will definitely benefit from it. And in the long run, it will push up the GDP of Canada. However, since it is still at the stage of recession, people might save more rather to spend more. And this might be hard to reach equilibrium GDP.
Reflection
As the economy recover from the recession, the demand of goods will definitly goes up, which also means the supply from manufactures will also goes up. The earthquake crisis that occured in Japan will bring opportunities to the province of British Columbia. There will be a high demand of wood for construction and rebuilding the city, and since British Columbia's major export is wood, it will definitely benefit the province. However, i think the auto industry is more likely to be contiously affect because of the increasing oil price. And the major reason for that to happen is the riots and revolutions happening in the Middle East and Afirca.
Wednesday, March 2, 2011
GDP gains yet to bite into jobless rate
http://www.theglobeandmail.com/report-on-business/economy/gdp-gains-yet-to-bite-into-jobless-rate/article1923213/
Summary
The GDP of Canada grew to 3.3 percent rate in the fourth quarter of 2010, which is primarily due to the gains in exports, especially the crude oil. However, the pushing factors of exports are depends on whether the protests in the Middle East would still last, which would definitely rise the price of oils. Despite the fact of the GDP growth, it may not cut too much on the 7.8 percent unemployment rate. That’s because brighter prospects are attracting people back into the work force, but not all are looking for jobs right away. Also, many people have had to settle for part-time employment, which created a measure of total hours worked in Canada well below the historical trends.
Connection
The growth of GDP in the fourth quarter reflects that the value of all final goods and services produced in Canada in this specific quarter has gone up. However, the increase in GDP cannot prove that people’s living standard improves. It will be improving only as long as GDP is increasing at a faster rate than the population. Also, GDP increases have to be compared to the inflation. One of the important components of Canada’s gross domestic product is the exports. Canadian-made automobiles are produced for the U.S market, and products like wheat and paper are also produced to residents of other countries.
Reflection
I think the growth in GDP in the fourth quarter is mainly because of the riots in Egypt and Labia. Whenever there are conflicts in the world, the price of gold and oil would go up. This directly benefits Canada’s crude oil exports where oil export volumes hit a record in the quarter and total sales abroad grew 4 percent. Also I believed that the consumers spending on goods contributed a lot to the GDP growth. More and more Canadians are spending money, it shows that people are starting to earn more income and are more confident about the economy market. In addition to that, the GDP growth would definitely increase consumers’ confidences toward the economy.
Summary
The GDP of Canada grew to 3.3 percent rate in the fourth quarter of 2010, which is primarily due to the gains in exports, especially the crude oil. However, the pushing factors of exports are depends on whether the protests in the Middle East would still last, which would definitely rise the price of oils. Despite the fact of the GDP growth, it may not cut too much on the 7.8 percent unemployment rate. That’s because brighter prospects are attracting people back into the work force, but not all are looking for jobs right away. Also, many people have had to settle for part-time employment, which created a measure of total hours worked in Canada well below the historical trends.
Connection
The growth of GDP in the fourth quarter reflects that the value of all final goods and services produced in Canada in this specific quarter has gone up. However, the increase in GDP cannot prove that people’s living standard improves. It will be improving only as long as GDP is increasing at a faster rate than the population. Also, GDP increases have to be compared to the inflation. One of the important components of Canada’s gross domestic product is the exports. Canadian-made automobiles are produced for the U.S market, and products like wheat and paper are also produced to residents of other countries.
Reflection
I think the growth in GDP in the fourth quarter is mainly because of the riots in Egypt and Labia. Whenever there are conflicts in the world, the price of gold and oil would go up. This directly benefits Canada’s crude oil exports where oil export volumes hit a record in the quarter and total sales abroad grew 4 percent. Also I believed that the consumers spending on goods contributed a lot to the GDP growth. More and more Canadians are spending money, it shows that people are starting to earn more income and are more confident about the economy market. In addition to that, the GDP growth would definitely increase consumers’ confidences toward the economy.
Friday, January 21, 2011
Canada Tax Cuts Will Add Jobs, Grow Revenue, Manufacturers Say
http://www.bloomberg.com/news/2011-01-12/canada-tax-cuts-will-add-jobs-grow-revenue-manufacturers-say.htmlSummary
Summary
Canada's manufacturing lobby group had announced that Prime Minister Stephen Harper is planning to reduce corporate tax rates over the next two years. This act is expected to provide more job employment, boost investment and help raise government revenue.The Conservative government's decision to cut the federal rate to 16.5%, which is a cut down by 1.5%. The government believed that it will generate 49,900 net jobs and add C$25.8 billion to the economy over two years. The report by the Canadian Manufacturers and Exporters estimated that the reductions would cost the federal government C$6.2 billion; however, it will generate as much as C$9.9 billion in additional revenue for provincial and federal government. Jayson Myers, chief executive of the manufacturers' group, stated that corporate tax cuts are critical drivers of the Canadian economy and the reductions are necessary to bring corporate taxes into line with other industrial economies.
Connection
The corporate tax is a kind of direct tax, which is a tax imposed on the person who is intended to pay the tax. Corporation tax provides a hugh amount of money to the the revenue of the government every year. Just like what the Canada's manufacturing lobby group stated, the cutting of the corporate tax will bring more reveune, employment, and investment to the country; these increased factors would affect the GDP(Gross Domestic product) of Canada. More people are employed means that more people would purchase goods and pay the taxes. In the long run, the reduction of the corporate tax would increase the GDP of Canada.
Reflection
In my opinion, i think cutting corporate tax is a good way to help Canada to walk out of the recession. One of the most serious issue during the recession is the unemployment. By cutting the corporate tax, there will be more employment positions for the Canadians. And these Canadians will have the ability to purchase more goods which can push the Canadian economy.When i saw the title about Canada cutting tax, I thought that the government would lost revenue because the taxes are cut. Instead, it can bring more revenue to the government. And I think that's a really smart decision by the government.
Summary
Canada's manufacturing lobby group had announced that Prime Minister Stephen Harper is planning to reduce corporate tax rates over the next two years. This act is expected to provide more job employment, boost investment and help raise government revenue.The Conservative government's decision to cut the federal rate to 16.5%, which is a cut down by 1.5%. The government believed that it will generate 49,900 net jobs and add C$25.8 billion to the economy over two years. The report by the Canadian Manufacturers and Exporters estimated that the reductions would cost the federal government C$6.2 billion; however, it will generate as much as C$9.9 billion in additional revenue for provincial and federal government. Jayson Myers, chief executive of the manufacturers' group, stated that corporate tax cuts are critical drivers of the Canadian economy and the reductions are necessary to bring corporate taxes into line with other industrial economies.
Connection
The corporate tax is a kind of direct tax, which is a tax imposed on the person who is intended to pay the tax. Corporation tax provides a hugh amount of money to the the revenue of the government every year. Just like what the Canada's manufacturing lobby group stated, the cutting of the corporate tax will bring more reveune, employment, and investment to the country; these increased factors would affect the GDP(Gross Domestic product) of Canada. More people are employed means that more people would purchase goods and pay the taxes. In the long run, the reduction of the corporate tax would increase the GDP of Canada.
Reflection
In my opinion, i think cutting corporate tax is a good way to help Canada to walk out of the recession. One of the most serious issue during the recession is the unemployment. By cutting the corporate tax, there will be more employment positions for the Canadians. And these Canadians will have the ability to purchase more goods which can push the Canadian economy.When i saw the title about Canada cutting tax, I thought that the government would lost revenue because the taxes are cut. Instead, it can bring more revenue to the government. And I think that's a really smart decision by the government.
Thursday, November 4, 2010
In a tight market, big demand for used cars drives up prices
http://www.boston.com/business/articles/2009/06/05/demand_for_used_cars_jumps_dealers_
confront_shortage/
Summary
As the economy is still slowly recovering from the recession, many consumers tend to spend less on luxury products like cars. Used cars, instead of new cars, become more appealing to many consumers. This leads to a high demand of limited supply of used cars, which drives up the prices of them. In May, Americans purchased around 4 million used cars, which is a rise of 23 percent over April. Car dealers are facing a shortage of used cars because of several factors: fewer consumers are trading in their old cars for new cars; the number of repossession is decreasing; and car rental companies are holding onto their cars for a longer period of time. Many owners of dealership that will be closed by GM and Chrysler are planning to open their own used car dealerships, which would increase the competition in the auto market and potentially boost up the prices further more.
Connection
The high demands of used cars are due to the change in price of its substitute products, which are new cars. New cars are elastic products and consumers react strongly to them. When the cost of new cars take up a huge percentage of the consumer's budgets, consumers are more likely to purchased used cars. In the opposite hand, used cars are decreasing in supply. As more and more consumers purchase used cars, fewer amounts of used cars will be available in the market. And this leads to higher prices of used cars. Overall, the increase in demand of used cars results an increase prices and increase quantity exchanged, which means you can get more with more money.
Reflection
In my opinion, car prices will still be staying around the same level in the next few years. However, as the prices of gasoline, which is a complimentary product of cars, keep increasing, it will eventually cause a decrease in demand of cars. Since not everyone can afford a car, I think that some car dealers should lower the prices of their cars. The reason for that is many cars do not really worth that much, and car dealers are just hoping to make a huge profit from them. If I want to purchase a car, I would buy a used car instead of a new car because they are cheaper and have a lower depreciation. I think car dealers should decrease the prices of their new cars because cars are elastic products. If car dealers do decrease their prices, they can get more revenues in exchange.
confront_shortage/
Summary
As the economy is still slowly recovering from the recession, many consumers tend to spend less on luxury products like cars. Used cars, instead of new cars, become more appealing to many consumers. This leads to a high demand of limited supply of used cars, which drives up the prices of them. In May, Americans purchased around 4 million used cars, which is a rise of 23 percent over April. Car dealers are facing a shortage of used cars because of several factors: fewer consumers are trading in their old cars for new cars; the number of repossession is decreasing; and car rental companies are holding onto their cars for a longer period of time. Many owners of dealership that will be closed by GM and Chrysler are planning to open their own used car dealerships, which would increase the competition in the auto market and potentially boost up the prices further more.
Connection
The high demands of used cars are due to the change in price of its substitute products, which are new cars. New cars are elastic products and consumers react strongly to them. When the cost of new cars take up a huge percentage of the consumer's budgets, consumers are more likely to purchased used cars. In the opposite hand, used cars are decreasing in supply. As more and more consumers purchase used cars, fewer amounts of used cars will be available in the market. And this leads to higher prices of used cars. Overall, the increase in demand of used cars results an increase prices and increase quantity exchanged, which means you can get more with more money.
Reflection
In my opinion, car prices will still be staying around the same level in the next few years. However, as the prices of gasoline, which is a complimentary product of cars, keep increasing, it will eventually cause a decrease in demand of cars. Since not everyone can afford a car, I think that some car dealers should lower the prices of their cars. The reason for that is many cars do not really worth that much, and car dealers are just hoping to make a huge profit from them. If I want to purchase a car, I would buy a used car instead of a new car because they are cheaper and have a lower depreciation. I think car dealers should decrease the prices of their new cars because cars are elastic products. If car dealers do decrease their prices, they can get more revenues in exchange.
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