Questions for Class Discussion 1. Political disturbances such as wars and threat
ID: 1134541 • Letter: Q
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Questions for Class Discussion 1. Political disturbances such as wars and threats of wars in the Middle East often lead to increases in the price of oil. You will often hear people say that the U.S.-ostt government should not let the price rise. What is the difference between these statements? 2. It is worth examining the idea that changes ause people to change their behavior. For example, any decrease in costs tends to encourage ntve an activity, ceteris paribus. In recent years, cell phone texting as a part of sed any plan service contracts has become unlimited at the fixed monthly service contract price, while the number of "free" minutes spent talking on the phone is limited under most plans. What has happened to the use of texting versus calling as a method of communicating? 3. An important issue that has been raised after the financial meltdown in 2008, we and the resulting recession has been how to deal with the recession. The economic stimulus policies of cutting taxes and increasing government spending contributed to a very large increase in the federal government's deficit. As aresult, the recession moderated and economic growth replaced the falling gross domestic product (GDP). During this period, a debate began in the United States that the size of government had gotten too large and therefore that spending should be cut. Discuss the positive and normative economic issues presented. Some widely reported and watched polls that are viewed as economic indicators of future levels of economic activity are various measures of "consumer confidence." The Conference Board, the University of Michigan, and ABC News/Money Magazine all use polls of consumers to measure their confidence in the economy. Polls ask people what they think about the economy and what their spending plans are but do not actually measure what people do. Why are polls such as these not likely to provide a model that predicts reliably? Tne 4.Explanation / Answer
1. Political disturbances and wars in middle east causes oil prices to go high. US people say that US Government should not let the price levels to go up.
Difference between these two statements.
This statement first shows demand and supply mismtach. It is clear that crude oil is natural gift to Middle east and they have more supply than their own demand hence they can earn money by exporting the excess. Also prices in middle east are lower dure to this excess supply. USA However has more demand than supply and hence need to import at higher prices. US Peoplw will not like prices to go higher as they will have to pay higher amount of money per unit consumption and their monthly budget will have to be compromised.
This also shows that US has a political stability which middle east countries do not have. US People can pressurise government to keep prices in check which is not the case with Middle east countries.
Hence there are polotical and economic differences between US and Middle east.
2.Case two states that text message has become cheaper now. Hence according to law of demand as prices went down, demand should have gone up (ceteris paribus)
But we have to consider whether better substitute are available to text messages due to advancement in technology. Example is Watsapp. This provides people to convey message at cheaper cost and more effectively. Hence text message is not following the law of demand.
3. This case has positive statements like
a. Increase in fiscal deficit due to recession and low collection of taxes.
This statement has a mathematical prrof to this and does not contain any value judgement and facts will not change with change in opinion.
Normative statements are:
a. Government machinery has grown too big and government should cut its expenditure.
This statement is subject to change with perception as it involves value judgement. Few people may say that govt. should cut expenses to make money available for development. Some people may say that it is necessary to maintain high expenses as govt. work after recession has increased and they need more people for these jobs.
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