Ask an Economist
What measures can be taken to keep the cattle industry in the U.S. from imploding? What can prevent vertical integration from further occurring? How can the American farmers and ranchers be kept from bankruptcy, (without gov’t subsidies or handouts) making sure that private ownership of land persists? What kind of market manipulation could cause all this?
Here are several resources that begin to address many of your questions.
Beef Marketing Margins - http://jaysonlusk.com/blog/2020/5/4/beef-marketing-margins
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First, the characterization of foodservice and restaurant workers as a career track is inaccurate. The median age of restaurant workers is 28.4 years, the second youngest sector of our economy (next to retail shoe stores at 24 years). As shown in...
The Male Female Wage Gap in Iowa compared to the U.S. by Peter F. Orazem and Levi Soborowicz
The Current Population Survey March Supplement includes questions about the last year’s annua earnings. The survey includes...
China mainly cuts corporate tax and fees (no tax cut for individuals) during the COVID-19 epidemic period so that firms could have incentive to increase the production compared to the scenario without tax and fee cuts.
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Thank you
Projects like temples and pyramids, as with public monuments today, represent a choice about how labor effort in a society is directed. Some labor is required to produce food, shelter and clothing that are necessities for sustaining life. Beyond...
Your understanding is correct that government debt allows governments to handle economic recessions better. When the private sector employment and therefore consumption demand is shrinking, the government can increase its public sector spending (...
This is an interesting observation. We regularly see spatial clustering of similar establishments for a number of reasons including natural advantage, agglomeration economies, zoning, social networks, and "norms" shaping location decisions...
Similar to the response of your AP Micro teacher -- part (potentially a large part) of the gender wage gap can be accounted for by the differences in the fields and positions that working men and women hold in the workforce. This study <...
The sale of Treasury securities is the government's way of borrowing funds from the public. When the government sells bills, notes, and bonds, the public, the investors, become the government's creditors. The Treasury...
Money refers to any asset that is widely used and accepted as a form of payment. It must be a medium of exchange, a unit of account, and a store of value (assets like stocks, bonds are all stores of value meaning they can be traded for goods at a...
Thank you for your question. Yes, we have recently developed a new Iowa Land Value web-portal which allows you to visualize the trends in Iowa land values at the county, district and state level. It is available at...
As is usually the case in economics and economic data analysis, the answer is "it depends."
From a theoretical standpoint "The" interest rate is not really something that exists in the real world, it is more of a conceptual tool that...
The unusually shaped yield curve was in the news the other day. But it was attributed to the Fed buying 10-year T-notes, which temporarily lowered their yields relative to notes/bonds with shorter maturity. It sounds to me the quote cited by...
A 2012 United States Department of Agriculture Economic Research Service study used a simulation analysis to estimate the impact a 5.8-million-person reduction in the number of unauthorized workers—agricultural and nonagricultural. This was...
Yes, large banks can in principle borrow funds at close to 0% from the FED and turn around and invest them on higher paying US bonds. But, when large banks do this, they push up the market price of these US bonds (being large players in the...
Standard theory describes channels through which raising rates affects both demand and supply. Higher rates raise the opportunity cost of spending and thus tend to dampen both business investment and household consumption. All else...
While it is true that lower prices at the pump benefit consumers, stock markets also infer that low oil prices signal weak demand for oil, in this case from travel-related fears due to the corona virus. And weak demand for oil often indicates...
An increase in government spending will increase the domestic interest rate. A lot depends on how analysts perceive future price levels and inflation. If the government spending is not expected to cause future inflation, an increase in interest...
In quantitative easing, the process of US Fed Bank buying bonds from Banks in order to increase money supply is pretty straight forward but no one seems to be able to explain my particular question or I guess confusion. I even posted on the US Fed open market website but they just gave me the typical answer I already knew.
Again, I'm aware that the FED can pretty much "print money" out of thin air and "inject" it into system but when I look closer at the details of what is happening, I still have trouble describing the process of injecting "fresh" money into an economic system because it looks as though they are limited by putting back the money that was spent to buy the bonds in the first place by banks.
So, to elaborate what I'm trying to say is that if you have a situation of the FED just giving away cash or call it a credit on their ledger for various banks out of the blue. Now that is exactly what I would call injecting fresh money because the banks didn't have to do anything or exchange anything in order to receive that money, just like if I were walking down the street and a complete stranger just came up to me and handed me cash. Now that scenario is what I would understand as injecting fresh money on top of a system.
But what is really happening is that under open market operation for quantitative easing, the US FED is buying up all the bonds that banks are holding at a given moment. Those bonds were purchased at an earlier time by various banks by giving money to the FED or other government agencies, so it looks at best to be putting all the money back into a system in which those monies were extracted from the system before, therefore it's not a "fresh" injection of new money. So it's just putting equal money back into system that was taken out at earlier time? Isn't it?
In other words, let's just say for simplicity that all US Banks spent $1 Trillion to buy bonds 5 years ago (so 5 years ago, $1 Trillion was taken out of an economic system) And now, 5 years later the FED is buying up those bonds from the banks(putting $1 Trillion back into system) The net effect is no new fresh money.
Put it another way, if you add up all the bonds that banks are holding, let's say it comes to $1 Trillion, the FED even though they want to inject $2 Trillion into system over time, they can not do that because all the bonds that are out there doesn't equal $2Trillion; they can only purchase back up to $1Trillion. So the saying, the FED can "print" money as much as they want into a system is not possible, at least in this example of how they do it now in the real world.
I'm sorry for such wordiness but you won't believe how much misdirected answers I get even from professionals. I'm really hoping you can shed some light on my confusion.
Let me try to answer your question by breaking it down.
“In other words, let's just say for simplicity that all US Banks spent $1 Trillion to buy bonds 5 years ago (so 5 years ago, $1 Trillion was taken out of an economic system)”.
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Right now, it is attractive for a corporation to set up or move their business to a RTW state due to lower wages and not having to deal with strong unions. I understand this. But how will a RTW state entice a company to move FROM a RTW state?
Cut corporate taxes? Suppress wages? Reduce services to the tax payers so more money can be given to the corporation? How will states entice business to set up shop once this is a Right to Work country? Thanks for your time.
Your question requires that I explain some of the background for Right-to-Work laws, and I took the liberty of adding a more general answer on the effect of Right-to-Work on the economic outcomes for firms and workers.
Union strength in...
People sometimes have different ideas in mind when considering home price appreciation. Most conventional discussions do not adjust for inflation. A more nuanced consideration could account for rises in the general price level, i.e.,...
In short, there are probably many ways that you could get a rough estimate of this and they are all likely flawed in some way or another which makes this a really tough question to answer. Also, we probably haven't fully realized the impact of...
Effectively, you are asking: how can there be different prices across countries within the same currency zone? This may sound surprising because within the Euro common currency, for example, we label regions as countries and there is a price...
Lifting boxes up to 150 lbs.
Loading and unloading trucks in a warehouse that can be freezing or sweltering,
Driving a large truck anywhere from 10-150 miles a day,
Customer interaction,
Route planning.
Now if the minimum wage was raised to $15, what would make me choose to work at this parcel company when I could work at a grocery store as a cashier? Wouldn't the new minimum wage increase cascade into other jobs in order to entice people to fill those more difficult positions?
I can see such a large jump in the minimum wage having unforeseen consequences. I would love someone's opinion on this. Thank you for your time!
The current federal minimum wage for workers in covered sectors is $7.25 an hour. As you suggest, raising the minimum wage to $15 an hour would motivate many workers who were already being paid $15 in the old regime to seek employment in less...
What seemed obvious to me, though, was that charging $2 per pound and selling 2,000 pounds of apples results in a gross earning of $4,000, while if the producer still charged $4 per pound and only produced the 1,000 pounds of apples that he could sell at that price he would still make $4,000. Why then should the producer work twice as hard by producing 2,000 to sell at $2 per pound when only producing 1,000 pounds of apples and selling them at a price of $4 earns the exact same amount of money? Both options are meeting the maximum demand for the apples at their respective price levels and making the same amount of money, so why should the producer strive to reach market equilibrium if that means, in this case, working twice as hard for the same profit? Wouldn't that be horribly inefficient?
Thank you for your time.
Your question relates to what we teach in our Principles of Microeconomics courses: “The Law of Supply.” Indeed, producing 4,000 pounds of apples and charging $4 per pound creates a surplus in this specific market you describe....