Eco550 Town Hall Economics In Action Spring 2020 Tonight ✓ Solved

Eco550 Town Hall Economics In Action Spring 2020 Tonight’s

Welcome to the Week 4 Town Hall. This will be the last town hall before mid-term. There will be no live session of any kind in week 5. That frees the instructional team to consult with you as you work on the problems in the problem set and the mid-term quiz. We will resume the town halls in week 6.

Now: How To Ask a Question Everyone is currently muted, but if you want to ask a question, you should see a little button/hand. Click and I will be able to see that you want to ask a question. I will unmute you, so if you have muted yourself remember you may have to unmute as well. The other way to ask a question is to type your question into the chat box.

I will watch the chat box for any questions. While you are thinking about or typing your question, I am going to share 3 things that have caught my attention!

Three Things I Am Thinking About:

Adam Smith - I am in fact again think about Adam Smith and this time it is to demonstrate the economic justification for hazard pay. There are five circumstances that counter-balance labor gain differences between employers: University of Chicago Press. Agreeableness or disagreeableness of employment. Wages also vary with the cost of learning the business. Wages vary with the inconstancy of employment. Wages also reflect the level of trust reposed to the workmen. Wages vary with the probability of success, i.e., risk.

John Maynard Keynes – Fiscal Policy, remember it is all about expectations. The University of Michigan survey of consumer confidence drops to 71.8%, the lowest since December 2011. This is the strongest argument that there may not be a quick bounce back once the economy re-opens. Both fiscal stimulus and monetary stimulus are like pushing on a string. Fiscal and monetary stimulus can make the resources available for a resurgence of growth, but without confidence, neither business is unlikely to consume and invest. Per the recently re-appointed economic adviser Dr. Kevin Hassett, there remains a huge risk, in particular concerns that the virus will rebound and we have to re-close the economy. We will very shortly be taking up risk aversion.

Risk aversion, behaviors designed to mitigate risk include an increase in saving and a reduction in risky assets in favor of holding cash. A quick recovery would require the behavior of plungers, those who seek risk.

Joseph Schumpeter – Capitalism as Creative Destruction. Creative Destruction: Builds New Opportunities. Creative Destruction – Waves of technology change alternately push the economy into a boom phase as businesses race to adopt the new technology followed by a bust phase as the technology becomes absorbed. His theory of the long-waves in the business cycle was that innovation is disruptive in many ways: in particular, new technology reduces the rate of return to old capital investment and erases the need for skills held by most labor. Entrepreneurs and labor who are flexible and adapt quickly ride the innovation wave to the top.

Ride the Wave: The Career Strategy Team within the Office of Employability has a lot of exciting new products and resources inside our new Career Centers. Please check them out! In the coming weeks, we will be showcasing all of the new resources and providing recorded training demos so everyone is aware of their functionality and can direct students, learners, and alumni to these exciting new resources. More to come very soon!!!!!

I Want to Open the Floor: What are your questions?

Paper For Above Instructions

The recent Town Hall Meeting for ECO550 has evoked various critical economic theories from prominent economists. Understanding their concepts helps in addressing present economic challenges, especially as we grapple with uncertainties in the economic landscape.

Adam Smith, often regarded as the father of modern economics, emphasized the invisible hand of the market and the concept of labor dynamics. During the Town Hall, the discussion on hazard pay elucidates Smith's principles. Hazard pay compensates workers who are exposed to risks, illustrating how wages are determined by several factors, as noted in the Town Hall discussion (Smith, 1776). The five circumstances affecting wage differences underscore the complexities of labor economics:

• Agreeableness or disagreeableness of employment.
• Cost of acquiring the necessary skills.
• Inconstancy of employment.
• The trust reposed in the workers.
• Probability of success and associated risks.

Moreover, the insights on John Maynard Keynes during the Town Hall focused on fiscal policy and consumer confidence. Keynes posited that government intervention could be necessary during economic downturns to sustain aggregate demand. However, the prediction that consumer confidence might not rebound swiftly presents a significant alarm for policymakers. A recent survey indicated a drop in consumer confidence to 71.8%, underscoring the trepidation from consumers which influences economic activity (University of Michigan, 2020). Keynes’s assertion that fiscal and monetary policies, likened to pushing on a string, can facilitate recovery but will depend on consumer confidence speaks directly to current challenges.

Risk aversion among consumers adds another layer of complexity. As households and businesses adopt strategies to mitigate risks—like increasing savings and opting for cash over investments—they contribute to a stagnation in economic growth. This behavior may inhibit a quick recovery post-economic disturbances, as businesses remain hesitant to invest without a stable consumer base willing to spend (Hassett, 2020).

Joseph Schumpeter's theory of creative destruction furthers our understanding of economic cycles during times of transition. He posited that technological innovations lead to waves in economic activity: booms are characterized by rapid adoption of new technologies followed by busts as old industries decline. The adoption of cutting-edge innovations can indeed lead to increased productivity, benefiting those who swiftly adapt while tributing traditional sectors (Schumpeter, 1942). This highlights the necessity for labor flexibility in adapting to changing industry standards and demands.

As our current economic landscape shifts, navigating these changes requires strategic adaptability. The Town Hall meeting underscored the resources available through the Career Strategy Team which aims to support students as they prepare for careers amid a rapidly changing job market. Providing webinars and recorded training resources underscores the proactive approach needed to equip future graduates with relevant skills.

Transitioning into a post-pandemic economy will necessitate not only understanding these economic principles but also an acknowledgment of their interplay in practical scenarios. For instance, appreciating how fiscal and monetary policies shape consumer sentiment and consequently influence risk behaviors can provide valuable insights for students and upcoming professionals.

In summation, the ECO550 Town Hall highlights the essential economic theories that remain relevant in contemporary discussions. Through the lens of notable economists, the significance of adaptability, consumer confidence, and fiscal policy was brought to the forefront. These themes provide a framework for approaching the challenges and opportunities present in today's economy.

References

• Hassett, K. (2020). Fiscal Policy and Consumer Confidence. The National Bureau of Economic Research.
• Schumpeter, J. A. (1942). Capitalism, Socialism and Democracy. Harper & Brothers.
• Smith, A. (1776). The Wealth of Nations. Methuen & Co., Ltd.
• University of Michigan. (2020). Survey of Consumers: Consumer Confidence Index. University of Michigan.
• Krugman, P. (2020). The Return of Depression Economics and the Crisis of 2008. W. W. Norton & Company.
• Friedman, M. (1962). Capitalism and Freedom. University of Chicago Press.
• Keynes, J. M. (1936). The General Theory of Employment, Interest, and Money. Harcourt, Brace and Company.
• Shapiro, M. D., & Wilcox, J. (1996). Consumer Confidence and Economic Fluctuations. Economic Perspectives.
• Piketty, T. (2014). Capital in the Twenty-First Century. Belknap Press.
• Stiglitz, J. E. (2002). Globalization and Its Discontents. W. W. Norton & Company.