How successful have “dove” Federal Reserve heads been in the past when it comes to managing the economy?

July 8, 2024 No Comments

A: Until the financial crisis of 2007-2008, it seemed as though dovish chairs of the Federal Reserve had used monetary policy to effectively keep down unemployment without noticeable negative consequences. The “Great Moderation” ushered in by Alan Greenspan was an enormous success story, until the

If left in place long term, what problems does protectionism cause for a country?

July 8, 2024 No Comments

A: In 1886, American free-trade advocate Henry George famously identified the problem of protectionism through an amusing analogy: “What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.” George poignantly identified

In economics, what is an index number?

July 8, 2024 No Comments

A: Economists often make comparisons between sets of data across time. For example, a macroeconomist might want to measure changes in the cost of living in the United States over a five-year period. This is where index numbers come in; they allow for easy, quick

Is a current account deficit good or bad for the economy?

July 8, 2024 No Comments

A: The current account deficit, also referred to as the “balance of payments deficit” or simply “trade deficit,” represents a fiat currency imbalance between the imports and exports of a country. Whenever the dollar value of tangible consumer goods, such as cars from Sweden or

Is Colombia an emerging market economy?

July 8, 2024 No Comments

A: Colombia meets the criteria of an emerging market economy. The South American country has a much lower gross domestic product, or GDP, per capita than the United States and other developed countries. Its Human Development Index, or HDI, which measures a country’s quality of

How is the stock market affected by Thanksgiving and Black Friday?

July 8, 2024 No Comments

A: Black Friday – the name given to the first day after Thanksgiving – is one of the most important retail and spending events in the United States. Every holiday season, prognosticators make predictions about the level of sales on Black Friday, and investor confidence

Is demand or supply more important to the economy?

July 8, 2024 No Comments

A: Supply and demand are both key to economic activity. The two influence each other and impact prices of consumer goods and services within an economy. Supply is the amount of a particular good or service available at a given time to consumers. Consumers, expressing

How does the performance of the stock market affect individual businesses?

July 8, 2024 No Comments

A: The stock market affects individual businesses by influencing consumer spending and providing the chance for stronger returns on capital costs. Consumers spend more during bull markets because they feel wealthier when they see their portfolios rise in value. During bear markets, they pull back

How does the stock market affect gross domestic product (GDP)?

July 8, 2024 No Comments

A: The stock market affects gross domestic product (GDP) primarily by influencing financial conditions and consumer confidence. When stocks are in a bull market, there tends to be a great deal of optimism surrounding the economy and the prospects of various stocks. High valuations allow

How does the U.S. Bureau of Labor Statistics calculate the unemployment rate published monthly?

July 8, 2024 No Comments

A: The unemployment rate is one of the most closely followed indicators, used by businesses, investors and private citizens to gauge the health of the U.S. economy. Investor sentiment and consumer confidence have strong inverse relationships with the percentage of unemployed Americans. When the unemployment

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