Pepsico

Topics: Economics, Macroeconomics, Money Pages: 6 (2330 words) Published: July 19, 2014
1.What three costs do pennies impose on society?
a. The cost of metal used in pennies has gone up beyond the face value of the coin itself. So manufacturing pennies is not worth. It takes approximately 1.8 cent to create one penny coin. Eventually this cost will be suffered by the society. b. Pennies are not worth the time to count or store in the current economic market. c. Pennies result in dead weight transaction in the economy. 2.Are U.S. coins fiat money or commodity money?

Other than pennies and nickels, U.S. currency today is fiat, the face value being substantially more than the value of the metal or paper. 3.Why such a slow recovery? Name the explanations for the slow US recovery John Taylor reject. Explain his reasoning. Slow Recovery - Gap does not close between Potential GDP and Real GDP. This is due to variety of macro and micro reasons. Macro reasons - long time low interest rates, debates about the size of multiplier Micro reasons - demand for housing, stimulus package aimed at health care, excessive risk taking Secondly the growth rate of Real GDP was very low. Due to low growth rate, Employment recovery was weak, causing big fraction of working age population not working. 4.Which argument does John Taylor find most convincing?

John finds bad economic policy being the major reason for slow economic growth- like stimulus packages, cash for clunkers, subsidies for first time home buyers. All these created short time solution but not sustainable recovery. 5.What are some of the measures of uncertainty that John Taylor considers as contributing to the slow recovery? John thinks that it is hard to make long term decision when economy is in uncertain state. The expiration of 2001-2003 tax cut, temporary cut in social security tax, expiration of unemployment benefits, delay in fix of Medicare, affordable care act taxes imposed, spending cuts - all this caused general uncertainty. 6.What are the key explanations for the slow recovery that Dr Leamer gives that differ from John Taylor’s explanation? a.The job market is not strong, there are extreme job losses. In the normal job market scenarions the jobs are lost, layoffs are done and people are hired back. In the current situation the jobs are lost and workers are displaced forcing them to relocate and in many cases acquire new skills. One example is half a mil manufacturing jobs permanently displaced workers. These jobs did never come back. b.Due globalization and government policies , there are advanced technological changes in the manufacturing as well as many other industries increasing the productivity. But the low skilled labor is not competent to this technologically advanced job market. For this education system must undergo changes to create the workforce which is skilled for such jobs.

7.What three costs do pennies impose on society?
a. The cost of metal used in pennies has gone up beyond the face value of the coin itself. So manufacturing pennies is not worth. It takes approximately 1.8 cent to create one penny coin. Eventually this cost will be suffered by the society. b. Pennies are not worth the time to count or store in the current economic market. c. Pennies result in dead weight transaction in the economy. 8.Are U.S. coins fiat money or commodity money?

Other than pennies and nickels, U.S. currency today is fiat, the face value being substantially more than the value of the metal or paper. 9.Why such a slow recovery? Name the explanations for the slow US recovery John Taylor reject. Explain his reasoning. Slow Recovery - Gap does not close between Potential GDP and Real GDP. This is due to variety of macro and micro reasons. Macro reasons - long time low interest rates, debates about the size of multiplier Micro reasons - demand for housing, stimulus package aimed at health care, excessive risk taking Secondly the growth rate of Real GDP was very low. Due to low growth rate, Employment recovery was weak, causing big fraction...
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