Log in
Economics
1
answer
0
watching
101
views

The U.S. Mint produces 7.4 billion pennies a year (see www.usmint.gov). Suppose further that about 5% of the pennies are removed from circulation each year. (They end up in peoples' jars never to be seen again; I am using U.S. Mint's figures.) Assume that yearly production takes place at the start of any given year and that the 5% are removed at the end of the year. Start your analysis in some years past and tell me how many pennies you think are in circulation in U.S. today? [Hint: Start with a production of 7.4 in any year (in your lifetime). Then ask what also remains in circulation from the production of the previous year? What about from the year before that? And so on... Go back forever; and then add all your terms up. This should generate an infinite geometric series for you.]

Watch
1
answer
0
watching
101
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Kristelle Balando
Kristelle BalandoLv10
29 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

Silicon Valley in California and Route 128 in Massachusetts are the preeminent high-tech clusters in the world. Silicon Valley dates back to the early 1930s when Stanford University encourages its electrical engineering graduates to stay in the area and start companies.

In the early 1950s, Stanford created the Stanford Industrial Park, leasing University land to high-tech companies that worked closely with its engineering school. In the mid-1950s, defense contractors such as Lockheed brought dollars to the area. By the late 1960s, a critical mass of such talent had accumulated. For example, in 1968, eight young engineers left their employer over a disagreement; over the next 20 years, they founded 65 new companies, including Intel Corporation, which later created the microprocessor chip, the brain of personal computers.

This pattern repeated: one researcher estimated that in small and medium-sized firms, 35% of the workforce would, on average, turn over in a year. Silicon Valley became a fertile location for start-ups, with dozens sprouting every year -- everything from firms specializing in hardware and software to network firms like eBay, Facebook, and Google. It also became home to investors who specialize in financing new high-tech companies. Silicon Valley's compact geographical location allowed people to form close social and research bonds eve while working for rival firms.

On the other side of the country, a high-tech cluster known as Route 128 lies on a 65-mile highway surrounding Boston and Cambridge. It owes its beginnings to the Massachusetts Institute of Technology (MIT), the top engineering university in the world, as well as funding from the U.S. military, NASA, and the National Science Foundation. In the 1950s Route 128 dominated Silicon Valley, with three times the employment.

But early on Route 128 differed from Silicon Valley in significant ways. Geographically, Route 128 was more spread out than Silicon Valley. Its forms were larger; reflecting the needs of defense contractors during the Cold War. And MIT extended little help to Route 128 firms.

Another major difference between the two clusters lay in how firms were organized. Route 128 firms tended to be "vertically integrated", combining the entire chain of production from research to design to production in the same firm. Silicon Valley firms focused exclusively on research and design, contracting production out to specialized firms that achieved economies of scale. In contrast to the fluidity of employees and ideas across companies in Silicon Valley, Route 128 firms emphasized a commitment to lifetime employment and closely guarded their innovations to remain competitive.

The 1970s and 1980s were harsh for Route 128. Military spending dried up, and it lost its edge in microcomputers when Apollo Computers lost its preeminence to an aggressive Silicon valley from, Sun Microsystems. By 1980, electronics employment in Silicon valley was three times that of Route 128. Over time, Route 128 ceded the advantage to Silicon Valley in electronics and networking. Today its niche is in biotechnology, genetics, materials engineering, and finance.

1. What positive externalities were common to both Silicon Valley and Route 128? What positive externalities were not common to both? Explain.

2. What factors made Silicon Valley such a fertile place for start-ups? How did these factors interact with one another? What inhibited start-ups in Route 128?

3. In hindsight, what could Apollo Computers have done to maintain its advantage in mini-computers? What does this tell you generally about research clusters?

*Article*

The U.S. economy is revving up just as Europe and other major economies lose steam, jeopardizing a rare period in which the world’s largest economies have been accelerating in unison.

The European Central Bank on Thursday took another step toward ending the massive stimulus measures it has used in an effort to boost growth since 2015. But ECB officials also said they would hold interest rates steady through summer next year, a sign that they felt the eurozone economy remains fragile.

In an indication of growing economic vigor in the U.S., the Federal Reserve on Wednesday tapped the brakes again, raising the benchmark interest rate by a quarter of a percentage point and signaling it may quicken the pace of future rate increases because of a strengthening economy and tightening labor markets.

The economies’ diverging paths were expressed most prominently in the euro, which on Thursday suffered its worst day against the dollar in two years. The euro lost 1.88% against the U.S. currency, its biggest drop since the day after the U.K. voted to leave the European Union.

The central bank announcements over the past two days offered the latest evidence that heady growth expectations for Europe and other major economies outside the U.S. might not be achieved, defying analysts who began the year convinced that the world economy’s first synchronized expansion in years would continue.

The International Monetary Fund said in January that the world’s seven largest economies each grew more than 1.5% in 2017, and it predicted more solid growth this year. Global manufacturing was booming and the IHS Markit global purchasing managers index that month was its strongest in nearly seven years.

Many investors counted on a revitalized Europe to lead that growth in 2018. But recent labor strikes in France, political turmoil in Italy and softer economic data are causing investors to rethink that premise. Germany last week reported that factory orders dropped 2.5% in April, while eurozone growth was 0.4% in the first quarter, down from 0.7% in the final quarter of 2017. On Thursday, the ECB revised down its eurozone growth expectations for this year to 2.1%, from 2.4%.

“When we look at Europe, the very strong momentum we saw in data last year has been waning this year,” said Holly MacDonald, chief investment strategist at Bessemer Trust.

Europe isn’t the only region to show signs of cooling down. The People’s Bank of China this week also left a suite of key short-term interest rates unchanged. New data showed business activity, including investment and retail sales, slowed in May, suggesting the world’s second-largest economy is facing growing headwinds.

The disappointing figures “warranted China to take a cautious tone,” said Tommy Xie, an economist at OCBC Bank.

In the U.S., meanwhile, recent data suggest an economic expansion that just became the second-longest in the nation’s history is accelerating, rather than slowing down.

The U.S. economy grew modestly over the winter—at a 2.2% annual rate in January through March—but seems to be ramping up further this spring. Growth is on track to exceed a 4% pace in the three months ending in June, which would be the fastest of any quarter in almost four years.

Spending at U.S. retailers soared 0.8% in May, the biggest jump in six months, according to U.S. government data released on Thursday. Consumers, spurred by tax cuts and the lowest unemployment in half a century, shelled out more for cars, clothing, building supplies, health products and bar tabs.

“We may be entering a new level of consumer spending right now,” said economist Robert Frick of the Navy Federal Credit Union. He pointed out that more and more blue-collar workers are finding work as the labor expansion endures, and those workers tend to spend a greater portion of their incomes, out of necessity, than higher-income workers, who save more.

He added that low unemployment, strong consumer spending and modest inflation are likely to keep the economy on strong footing this year: “We’re in a Goldilocks zone right now.”

In the eurozone, rates have stayed pegged at negative levels—now at minus 0.4%—since 2014. Despite some initial concerns, investors have become more relaxed about possible unintended effects of negative rates on the economy.

On Thursday, investors reacted to the ECB’s announcement to end bond purchases while keeping rates low longer by selling the euro and bidding up stocks. It is the latest example of interest-rate moves returning to the driver’s seat of monetary policy. In the wake of the financial crisis, central bankers rolled out a raft of unprecedented and complex measures, including bond buying and lending facilities for banks, pitching them as a way to lower long-term borrowing costs at a time when short-term rates could go no lower.

Not all investors are ready to write off Europe’s growth prospects. Roland Kaloyan, head of European equity strategy at ?Société Générale, believes that lackluster economic data in the first quarter is a “temporary soft patch,” and that “fundamentals remain very solid for eurozone growth,” whereas he expects the U.S. economy to go into a recession around 2020.

Others believe the euro will continue to weaken further this year, but think that markets are swinging too far in favor of U.S. growth.

Next year, “we expect the euro to rebound against the dollar even if the ECB only hikes late in the year,” said Ingvild Borgen Gjerde, an analyst at Capital Economics. “We think the Fed’s tightening cycle will come to an end in mid-2019, far sooner than is discounted in the markets.”

*question*

4. Should a goal of monetary policymakers be to raise the value of its currency? How would a currency appreciate both help and hurt an economy? If a central bank wants to appreciate its currency, how in practice would it do so?

Background When you look at news reports of any kind, there can be a tendency to take them at face value, accepting what they tell us as the truth. This is usually a grave mistake. News typically moves quickly, with tight deadlines to get information and there is almost always a bias at play. Numbers are an easy way to manipulate the truth--and truth itself can be pretty flexible when it comes to human relationships. The value of the truth can also be flexible depending on your point of view. For example, in the second quarter of 2015, the U.S. dollar is strong--meaning it has a high value against foreign currency. Is this a good thing or a bad thing? If you're a consumer, it's generally a good thing in the short-term. It means items imported to the U.S. cost us less to buy. Go us! If you are a growing business that exports, it's a bad thing because your costs make it difficult to compete with locally produced goods in foreign markets. If you're traveling out of the country, it's good because the dollar goes farther. If you have a business that benefits from foreign tourism, it's bad because visitors have less money and may chose to go to other places where their money gives them more buying power.

find an article (you might try MSN Money or CNN Money or something similar) and then write at least 600 words. how strong the position the article takes is. Questions to consider include: What are the weaknesses to the article? How are numbers used effectively? What's missing? How are the numbers being used to disguise something?

ARTIcle

President Obama slapped a stiff 35% tariff on Chinese tires in 2009 after American companies complained about unfair competition. They said China was flooding America with tires at low prices making it tough for U.S. companies to compete. The tire tariff gradually waned, and finally ended in 2012. The tariff saved 1,200 U.S. tire jobs, which had been in sharp decline. And U.S. tire production rose after a major decline. "Over a thousand Americans are working today because we stopped a surge in Chinese tires," Obama said in his 2012 State of the Union address. But a study from the Peterson Institute of International Economics found that the tariffs cost Americans in many other ways. Americans paid more for tires. Some Chinese-made tires cost as much as 26% more -- rising on average to $39 per tire, from about $31. And U.S. tire makers, facing less competition from China, also raised prices on American-made tires 3.2%. According to Peterson's model, higher prices from the tire tariff cost Americans an extra $1.1 billion, which translated to an estimated 3,731 retail jobs lost. Plus, China fought back by imposing penalties on U.S. shipments of chicken parts. The Peterson study estimates that China's retaliation cost American chicken producers $1 billion in sales. "Tire safeguards did not change Chinese policies in a helpful way, nor did they boost U.S. employment," wrote Gary Hufbauer, a trade expert at Peterson, who authored the report. Indeed, the tariffs didn't bring the tire-making jobs back to previous levels -- a similar trend that's played out for the rest of U.S. manufacturing. But they did help to stem the job losses. In 2008, there were about 60,000 American workers making tires. Now, there are about 55,000. That's better than the low point reached in 2010 but not back to pre-tariff levels. Related: Trump's 35% tariff on companies: Easier said than done An Obama administration official, who requested anonymity, disputed some of the calculations and assumptions in the Peterson study. For instance, the official claimed tire prices did not go up by as much as the study claims. Hufbauer said no one until now had contested any of his analysis in the four years since it was published. He noted that the administration official didn't provide an alternative estimate for price changes. Republican presidential nominee Mitt Romney criticized Obama for the tariffs in his 2010 book "No Apology." "President Obama's action to defend American tire companies from foreign competition may make good politics by repaying unions for their support of his campaign, but it is decidedly bad for the nation and our workers," Romney said. U.S. tire makers still applaud Obama's tariffs. Morry Taylor, CEO of Titan International, a U.S.-based tire company, is one of them. "He did what he should have done and he should have done more of it," says Taylor, who voted for Trump. His company has plants in Ohio, Wisconsin and Illinois (they also have operations in Brazil and Russia). Related: 3 ways Trump can go after China and Mexico Taylor argues that if the tariffs weren't put in place he might not have any business today to speak of. By 2012, Taylor still had 1,800 tire-making workers, about the same amount as before the tariffs. Today, however, his firm only has a little more than 900 workers. His problem today is what he describes as unfair competition from India, where firms make cheap tires and sell in the U.S. at prices he can't afford to sell at. He hopes Trump considers higher tariffs on tires, saying it would save jobs. To be clear, Obama wasn't trying to "bring back jobs" so much as protect the ones already in America, which he accomplished. Trump wants to bring manufacturing jobs back from other countries. Some trade experts believe that would be difficult task, since many of jobs overseas are low-skill positions and many U.S. manufacturing firms now want highly skilled employees. In any case, U.S. tire production recovered but didn't surge. Instead, U.S. tire imports from all other countries excluding China rose dramatically, Hufbauer found. In other words, the Chinese tire jobs didn't come to the U.S. -- they went to the next cheapest countries. In the end, Hufbauer argues the tariffs didn't make a difference. "The best thing about the tire tariffs is that they expire," Hufbauer wrote in 2012. CNNMoney (New York) First published January 3, 2017: 3:41 PM ET

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in