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Yihan Li

BBC News - Federal Reserve to buy more debt to boost US economy - 0 views

www.bbc.co.uk/...business-19592151

shared by Yihan Li on 14 Sep 12 - No Cached
  • buy "additional agency mortgage-backed securities at a pace of $40bn (£25bn) per month".
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      Buying the securities increases the supply of money in the market
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      Increase in supply of money is used to expand aggregate demand
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      (evaluation) talk about the merits and demerits of increase in AD
  • nterest rates in the US have been close to zero for several years now, and the Fed again kept them at below 0.25% on Thursday.
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      Low interest rate keeps aggregate demand high -> more spending and investment 
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      Draw interest rate vs quantity of money diagram
  • quantitative easing
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      quantitative easing = A monetary policy used to increase the money supply by buying government securities or other securities from the market
  • ...7 more annotations...
  • "We doubt it will be enough to get the economy on the right track. It's only a matter of time before speculation begins as to when the Fed will raise its purchases from $40bn a month."
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      (evaluation) not enough money is spent by Federal Reserve 
  • the central bank buys bonds to keep the long-term cost of borrowing down.
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      Increase in supply of money keeps cost of borrowing (long-term interest rate) low
  • The unemployment rate in the US has been above 8% since January 2009, but the current 8.1% is down from the recent high of 10% in October 2009.
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      high unemployment = the economy is not doing well. 
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      The main reason why Fed implemented the policy 
  • US presidential election.
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      The decision is influenced by political factors 
  • Ben Bernanke also lowered the Fed's growth forecast for the US economy to 2% this year, down from the 2.4% it predicted in June
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      Fed decided to implement the policy because economy is not growing quickly enough 
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      Draw a AD-AS diagram to explain the results of AD shift on economy 
  • "The committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labour market conditions,
    • Yihan Li
      Yihan Li on 14 Sep 12
       
      Without Fed's help, unemployment may increase or be stagnant. Maybe talk about Okun's law, which states that 3% increase in output corresponds to a 1% decline in the rate of unemployment
  • Federal Reserve to buy more debt to boost US economy
    • Yihan Li
      Yihan Li on 17 Sep 12
       
      Why using monetary policy, not using fiscal policy? What are other options?  
Edward Pearson

Lost in inflation: the trap of focusing solely on the consumer price index | The Japan Times Online - 3 views

www.japantimes.co.jp/...nb20120220jp.html

Inflation Monetary Policy Fiscal Policy Balance of Payments

shared by Edward Pearson on 31 May 12 - No Cached
  • interest rate policy since February 1999
    • Edward Pearson
      Edward Pearson on 31 May 12
       
      -Increase borrowing and decreasing savings -however, real interest rates are positive due to deflation 
  • the government's fiscal policy options are starting to run out
    • Edward Pearson
      Edward Pearson on 31 May 12
       
      Increase in budget deficit as spending increases and tax revenue decreases - along with debt of 215% of GDP
  • This is reflected by globalized Japan's descent into its first trade deficit since 1980
    • Edward Pearson
      Edward Pearson on 31 May 12
       
      GDP=C+!+G+X-M  demand for domestic products decrease because foreign products are relatively cheaper - increase in M and decrease in X, so AD decreases and GDP decrease causing deflation
  • ...4 more annotations...
  • prices in Japan remain very high by international standards.
    • Edward Pearson
      Edward Pearson on 31 May 12
       
      Lack of factors of production - mainly land need for importing from foreign countries possible solutions- Free trade
  • This is one factor behind Japan's high prices.
  • cannot pin their hopes on wage increases
    • Edward Pearson
      Edward Pearson on 31 May 12
       
      should be a decrease in wages as revenue decreases - sticky wages 
  • They should step back and take a look at the big picture, including Japan's abnormally high prices,
    • Edward Pearson
      Edward Pearson on 31 May 12
       
      deflation possibly could be advantages - increase in spending power, international competitiveness etc 
Shoko Kuroda

Weak Job Growth in May as Unemployment Rate Ticked Up - NYTimes.com - 0 views

www.nytimes.com/...n-may-jobless-rate-at-8-2.html

shared by Shoko Kuroda on 04 Jun 12 - No Cached
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      The title of the article indicates that it is about unemployment which is in the field od macroeconomics. 
  • global slowdown as the European crisis escalates.
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      This sentence indicates the correlation between the unemployment fear of workers in America and the European crisis with countries referred as 'PIGS'. 
  • ...22 more annotations...
  • the nation’s employers added the fewest jobs in a year and the unemployment rate actually rose,
  • serious vulnerability for President Obama as he faces re-election
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      The significance of unemployment rate is clearly indicated, such as the the impact on Obama's re-election. 
  • The unemployment rate rose to 8.2 percent in May from 8.1 in April, though largely because more people began looking for work.
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      Unemployment raises when there is more demand for working because no matter whether there is an increase or decrease in the working labour force, the number of available jobs are limited. Because there is a limited number in the number of jobs, the increase in demand for employment raises the unemployment rate. 
  • another recession.
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      The word 'recession' can used to introduce the Keynesian economics with the boom and the busts cycles and monetary and fiscal policies to reduce these cycles. 
  • The report on American jobs added to the global pall that has deepened with Europe’s debt crisis and slowing growth in China and India.
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      This indicates the influence of America's unemployment rate as well as their economic growth to the other major countries, such as China and India. A increase in America's unemployment rate resulting in a decrease in America's GDP growth has affect on the economy of China and India, such as in exporting goods. 
  • Yields on United States and German government bonds also slumped as investors bid up the bonds’ prices looking for safety.
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      The decrease in the prices of government bonds in Germany and United States indicates that the citizens dont have the trust to these countries for their skill to return the money with a fixed amount of tax. This is also another indication for the economy not doing well. 
  • The underlying pace of the domestic economy is a slog, driven by manufacturing and restrained by slackening global demand.
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      The main factor of decrease in America's GDP is stated as the overall decrease in the demand for goods since many economies are not successful. 
  • “Manufacturers are very concerned about Europe because a blowup in Europe means a global slowdown,”
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      Europe can be noted as one of the important continents which greatly affect the global economy. 
  • diverse,
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      Whether a company has a diverse target audience or not can be a indicator to determine the impacts of global slow down in markets. 
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      A graph illustrating a global decrease in demand can be applied to draw the consequences of decrease in GDP. 
  • Obama’s economic policies.
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      The economic policies which President Obama used can be described thoroughly in this section, such as fiscal and monetary and their success. 
  • The May jobs report showed gains in health care, transportation and warehousing, and wholesale trade, while construction jobs fell by a seasonally adjusted 28,000. Even some bright spots, like booming auto sales, failed to meet expectations or to bolster manufacturing employment by much — only 12,000 jobs.
    • Shoko Kuroda
      Shoko Kuroda on 04 Jun 12
       
      Both the positives and the negatives of America's economy can be explained more in depth and the impact of each factor to the market. 
Yihan Li

BBC News - Australia cuts interest rates in a bid to boost growth - 0 views

www.bbc.co.uk/...business-18327769

shared by Yihan Li on 06 Jun 12 - No Cached
  • The bank cut its key rate to 3.5% from 3.75%.
    • Yihan Li
      Yihan Li on 07 Jun 12
       
      Australia's central bank cut its interest rate, which is a monetary policy. This is intended to increase consumption and investment, thus the aggregate demand   
  • At the same time, domestic demand has also been stagnant despite efforts to spur consumption.
  • At the same time, domestic demand has also been stagnant despite efforts to spur consumption.
  • ...14 more annotations...
  • At the same time, domestic demand has also been stagnant despite efforts to spur consumption.
  • At the same time, domestic demand has also been stagnant despite efforts to spur consumption.
    • Yihan Li
      Yihan Li on 07 Jun 12
       
      Both monetary and fiscal policies are used to stimulate the consumption, thus AD. However this has not worked. 
  • There have been concerns that Australia's resources-led boom may be hurt by falling demand due to a slowdown in global growth.
  • There have been concerns that Australia's resources-led boom may be hurt by falling demand due to a slowdown in global growth.
  • There have been concerns that Australia's resources-led boom may be hurt by falling demand due to a slowdown in global growth.
  • There have been concerns that Australia's resources-led boom may be hurt by falling demand due to a slowdown in global growth.
  • ere have been concerns that Australia's resources-led boom may be hurt by falling
  • ave been concerns that Australia's resources-led boom may be hurt by falling
  • There have been concerns that Australia's resources-led boom may be hurt by falling demand due to a slowdown in global growth.
    • Yihan Li
      Yihan Li on 07 Jun 12
       
      Main component of Australia's GDP growth was export of natural resources. Due to unstable international economy, foreign companies manufacture less good, so less Australia's resources will be demanded. Thus GDP growth slows down.
    • Yihan Li
      Yihan Li on 07 Jun 12
       
      AD-AS curves can be used 
  • In China, one of the biggest markets for Australian commodity exports, both the manufacturing and non-manufacturing sectors have seen the pace of growth slow in May, raising concerns about a slowdown in its economy.
    • Yihan Li
      Yihan Li on 07 Jun 12
       
      Since China is Australia's biggest exporter, stagnation of Chinese economy will reduce the export, thus AD
  • Meanwhile there have been fears about the recovery in the US economy losing its pace after it reported weaker-than-expected jobs data for May.
    • Yihan Li
      Yihan Li on 07 Jun 12
       
      Low consumer and business confidence, which may reduce consumption and investment 
  • However, there has been a slew of weak economic data that has come out since then.
  • accommodative stance
    • Yihan Li
      Yihan Li on 07 Jun 12
       
      accommodative stance = looser monetary policies
  • The country's housing market has seen prices fall and continues to remain subdued despite earlier cuts to the cost of borrowing
    • Yihan Li
      Yihan Li on 07 Jun 12
       
      House is most people's biggest asset. The decrease in its price will reduce people's disposable income, thus consumption and AD 
  • Yihan Li on 06 Jun 12
     
    Interest Rate and Macroeconomy  
Emily Hoshi

Gasoline Pushes Consumer Prices to 10-Month High - NYTimes.com - 0 views

www.nytimes.com/...lat-apart-from-gas-prices.html

shared by Emily Hoshi on 26 Sep 12 - No Cached
    • Emily Hoshi
      Emily Hoshi on 26 Sep 12
       
      What can the government do to prevent the inflation? - what policies are there? monetary and fiscal but in this case monetary policy is the one to change the interest rates. --> however, this can lead to an increase in unemployment rate. WHY? 
  • Consumer prices rose
  • Surging gasoline prices hurt consumer confidence
  • ...29 more annotations...
  • as the cost of gasoline spiked,
  • Consumer Price Index rose 0.4 percent in February after advancing 0.2 percent
  • Gasoline accounted for more than 80 percent of the rise.
  • Consumer purchasing power
  • going to remain pressured by rising gasoline prices,
  • he said a trend toward lower inflation was still in place.
  • Consumer prices rose 2.9 percent last month from the same period a year ago, unchanged from January but down from a peak of 3.9 percent in September.
  • The core index was up 2.2 percent over the 12 months through February, down from 2.3 percent in January.
  • Consumer expectations for inflation
  • did not expect the steep climb in gasoline costs to last.
  • $4 gasoline has lost its shock value,
  • among lower-income households
  • Investor expectations of inflation
  • also been on the rise
  • Production at the nation’s mines, factories and utilities held steady last month after a 0.4 percent gain in January
  • expand moderately
  • Manufacturing output rose 0.3 percent
  • automakers cut production by 1.1 percent after two big monthly gains
  • Carmakers had raised production to meet demand for popular models in short supply
  • The consumer price report showed gasoline prices soared 6 percent last month, the largest increase
  • risen 0.9 percent
  • cushion against rising gas prices at the pump, salaries are not keeping up.
  • strengthening jobs market is providing
  • arnings, adjusted for inflation, fell 0.3 percent last month after slipping 0.1 percent in January
  • Food costs held steady
  • some price relief for households.
  • , airline tickets and used cars and trucks.
  • declines in the prices of tobacco
  • motor vehicle prices recorded their first increase
Nayana Devadas

CURRENCIES & BONDS / Dollar below 81.50 yen in Tokyo, cutting early gains ahead of BOJ decision : Business : DAILY YOMIURI ONLINE (The Daily Yomiuri) - 0 views

www.yomiuri.co.jp/...T121119003949.htm

shared by Nayana Devadas on 29 Nov 12 - No Cached
  • At 5 p.m., the dollar was quoted at 81.27-30 yen, still up from 81.11-12 yen at the same time Friday.
  • The dollar pared its early gains to trade mostly below 81.50 yen in Tokyo trading Monday, as the recent yen-selling spree took a pause before the Bank of Japan's upcoming monetary policy decision.
  • where it was supported by hopes for an early deal to avoid the "fiscal cliff," or a combination of looming tax increases and spending cuts.
  • ...3 more annotations...
  • consider a plan under which the central bank buys construction bonds directly from the government
  • expectations for drastic monetary easing by the central bank. Abe's repeated calls for "unlimited" monetary easing, aimed at beating the deflation, sparked such expectations.
  • In futures trading on the Tokyo Stock Exchange, the lead December contract on 10-year JGBs edged down 0.08 point from Friday to end at 144.62. Volume decreased to 25,289 contracts from 33,371.
Arla Takala

Spain unemployment hits record high - Europe - Al Jazeera English - 0 views

www.aljazeera.com/...20124278531872704.html

shared by Arla Takala on 06 Jun 12 - No Cached
  • unemployment
    • Arla Takala
      Arla Takala on 06 Jun 12
       
      One of the 4 primary macroeconomic objective
  • jobless rate of 24.4 per cent in first quarter,
    • Arla Takala
      Arla Takala on 06 Jun 12
       
      Governments set target for unemployment is about 5% each year
  • "BBB "
    • Arla Takala
      Arla Takala on 06 Jun 12
       
      Bond credit rating--> BBB - has adequate capacity to meet its financial commitments
  • ...5 more annotations...
  • The figures are terrible for everyone and terrible for the government
    • Arla Takala
      Arla Takala on 06 Jun 12
       
      Terrible for everyone: --> no job = no income --> less spending Terrible for government: --> decrease on government revenue --> government has to spend more money on unemployment benefits --> government is receiving less money and spending more money --> budget deficit
  • economy to shrink
    • Arla Takala
      Arla Takala on 06 Jun 12
       
      Negative economic growth can cause recession
  • fiscal
    • Arla Takala
      Arla Takala on 06 Jun 12
       
      Government policy that focuses on taxes and government spending to improve the economy
  • S&P predicts the Spanish economy will shrink by 1.5 per cent this year, having previously forecasted growth of 0.3 per cen
    • Arla Takala
      Arla Takala on 06 Jun 12
       
      Decrease in GDP due to decrease in consumer spending
  • It added that Spain's commercial banks are increasingly leaning to official sources for funds as they struggle to deal with piles of bad loans, especially in real estate.
    • Arla Takala
      Arla Takala on 06 Jun 12
       
      Decrease in government spending
Aili Saito

BBC News - UK economy in double-dip recession - 1 views

www.bbc.co.uk/...business-17836624

shared by Aili Saito on 07 Jun 12 - No Cached
  • double-dip recession
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      can be represented by a AD/AS graph (shift left in AD) -> leads to recession
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      UK was once in recession and they returned back into recession soon after
  • construction output
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      the demand of construction decreased and the AD decreases (shifts to the left)
  • economic output was slightly smaller now
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      again, there was a decrease in AD
  • ...6 more annotations...
  • everything we can" to generate growth
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      this could be monetary/fiscal policies
  • production industries decreased by 0.4%, construction decreased by 3%
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      both examples of why AD has decreased that lead to recession
  • government spending
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      a fall in government spending = leads to a fall in AD (AD=C+I+G+(X-M))
  • 25% in public sector housing and 24% in public non-housing and with a further 10% cuts to both anticipated for 2013
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      the decrease in government spending has surpassed the anticipated increase in other factors of AD
  • guarded optimism
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      there seems to already be business/consumer confidence
  • little more aggressive in terms of recruitment and investment.
    • Aili Saito
      Aili Saito on 07 Jun 12
       
      the government wants to increase business confidence 
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