Ask an Economist
Welcome to Ask an Economist, a public service of the Department of Economics at Iowa State University, designed to answer your economic questions.
Our talented faculty and alumni can answer questions on a variety of economic topics to help you make more informed choices about your day-to-day decisions--or to just add a more reasoned voice when talk of the economy comes up around the dinner table.
Questions & Answers
Thank you for your question. Indeed, part of the expenditure in health expenditure and defense will count towards total GDP.
Money supply increases when the FED (say NY FED) buys T-bonds from other banks (say Wells Fargo) or non-bank public (say a household or a dealer) in a secondary market, NOT a primary market.
I will focus on the benefits of the Canal when it becomes operational, because a project of this magnitude is very likely to create numerous temporary jobs and plenty of opportunities for local companies in the construction sector during the...
Continue Reading AnswerYour 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.
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)”.
At present, I am not aware of a widely accepted academic research in economics and finance that would provide a definitive explanation for the exact calendar timing of major financial market fluctuations in the United States for the time period...
Avian influenza has continued to spread, particularly in flocks of egg-laying hens. When a farm encounters a case of avian influenza, some birds die and others are euthanized.
How can we understand which country is more powerful when we know the rate between their currencies?
The rates don’t reflect relative power. For example, 1 UK pound equals about 1.56 USD. That does not at all mean that UK is more powerful. Similarly, a US dollar approximately exchange for 122 Japanese yen currently.
I think you don't want everyone to have access to the money-printing press or if you do, then let there be a fixed limit (say, they can print no more than a thousand "basics", the name of this currency).
First, a disclaimer. Whatever is written below is not actual investment advice; it is general economics discussion, a dinner table conversation, no more.
If the government destroys ivory this year, then there is less of it this year which may cause price of ivory to rise. That may dissuade some current potential buyers.
There are many assumptions underlying your question. To begin with, we have to ask, why are people currently unemployed?
Let me try to remove some of the confusion. Imagine the only good in the economy is corn and corn costs $1 a pound, and imagine you and all others earn $100 a month.
Thank you for your question. The economies would look very different. Your hypothetical world seems analogous to one that imposes a 100% estate tax and uses a lottery to transfer any tax collected back to the economy.
First, a disclaimer. Whatever is written below is not actual investment advice; it is general economics discussion, a dinner table conversation, no more.
Economics is a science, and the goal of all sciences is to better understand phenomena that we observe in the real world.
Does the market provide too many or too few products, relative to some social optimum benchmark? It turns out that this question does not have a simple answer.
Your wealth in terms of home currency will increase whereas in terms of foreign currency it will decrease. If your home country prices remain the same, it means your real wealth has also increased.
China’s total trade (exports+imports) as percentage of GDP is about twice that of the US. In this sense, the US is a relatively closed economy and therefore its monetary policy is (and ought to be) more domestically oriented.
ISU Extension has created tools to explore the potential benefits/payments from the programs in the 2014 Farm Bill.
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.
There are two components to investment in the national income identity. In addition to expenditure on capital equipment and buildings by firms, investment also includes additions to business inventories (goods that firms did not sell).
You are missing a key difference between the federal budget deficit and the public debt level. The deficit shows by how much the federal government expenditures exceeded its revenues in a given fiscal year; the deficit is measured per year.
Given that the standard definition of government spending does not include the repayment of maturing debt, your understanding is correct.
In your example, the infrastructure investment of $20B will be included in the next fiscal year expenditures in the full amount. Thus, the deficit during the next fiscal year will be $10B + $20B = $30B.