The Three Most Important Things I Learned in Economics Class :: Class Reflection

The three close grand things I learned in Economics ClassThe fore to the highest degree important concept I learned was the goals of monetary policy. The principal(a) goal of a central bank is monetary value stableness (low and stable inflation). Some of the Feds (short for the Federal Reserve Bank) other concerns are elevated date economic growthstability of financial marketsinterest step stabilitystability in foreign exchange marketsThe Fed desires to maintain towering recitation because the condition of high unemployment, the alternative, creates idle workers and idle resources. This leads to closed factories, refreshful equipment and materials, ultimately decreasing our GDP. Now, let me further explain that the goal for high unemployment is not an unemployment train of aught, rather a level above zero where labor demand equals labor supply. This is known as the natural rate of unemployment.Economic growth focuses on load-bearing(a) firms to invest or encouraging peop le to save, which in turn creates funds for firms to invest. It runs hand-in-hand with the goal of high employment because in order for firms to be comfortable investing in assets much(prenominal) as devisets and equipment, unemployment must be low. Hereby, the people and resources will be on hand(predicate) to spur economic growth.If financial markets are instable, it will lead to astute contraction of economic activity. For example, in this most recent financial crisis, a deterioration in financial institutions balance sheets, along with asset price decline and interest rate hikes increased market uncertainty thus, worsening what is called adverse selection and moralistic hazard. This is a serious plight created before care transactions occur which information is misleading and promotes doing business with the most undesirable clients by a financial institution. In turn, these most undesirable clients later engage in undesirable behavior. All of this leads to a decline in economic activity, more adverse selection and moral hazards, a banking crisis and further declining in economic activity. Ultimately, the banking crisis came and unanticipated price level increases and even further declines in economic activity. Interest-rate stability is very important for the Fed to control because otherwise consumers, like you and I, will be disinclined to buy things like houses due to the fluctuation which will make it harder to plan for the future.The value of the US dollar relevant to other currencies is a study consideration for the Federal Reserve. If they prevent large changes in the value of the dollar, firms and individuals prat comfortably plan ahead to purchase or sell goods abroad.