Write a 1-2 page paper, answering the following questions: Provide an example of issues affecting the economy as a whole. Which economics principles governs the situation you described? Solution There are number of issues that are affecting the economy right now, The most important ones are related to globalization. Globalization has resulted in offshoring and outsourcing, these two components indeed has bought significant profits to american corporations at the cost of ordinary american jobs. Economists in general liked this model in the beginning, but the pilot projects of off-shoring have just blown out of proportion causing endless harm to western economies, Millions of people who were working as ordinary men and women simply lost their jobs and left to fend for themselves. Trillions of dollars worth of goods flowed freely across the seas, creating trillion dollar debts that can never be paid back. Simply put Economy right now is in a bad shape and it needs huge work around. Fed reserve just kept intrest rates very low so people could borrow more money to let economy function, but this has created huge bubbles in 2008 destroying enormous wealth, manufacturing cities are already empty and dysfunctional. Economy right now is taking much longer to recover, There are signs of non-recovery. Federal reserve right now is left with no other option than rising intrest rates, Rising intrest rates is a big negative for the economy as many people will be ineligible for new housing loans and many comapnies will have to pay higher intrest on their loans. How did we get here ? Federal reserve used almost all tools over decades to earn growth for the country and create new jobs, This had indeed created housing bubble where borrowers could easily borrow money to invest in useless assets. This lasted well for decades before finally ending in 2008. In 2008 most of the banks in home loan business went bust, this crisis has spread across the world exposing most of the world economies. When banks went bad, lending too stopped which stopped entire economic activity around the world causing global economic crisis. Its as simple as logistic line, It went all the way from US to Asia..

1. Write a 1-2 page paper, answering the following questions:
Provide an example of issues affecting the economy as a whole.
Which economics principles governs the situation you described?
Solution
There are number of issues that are affecting the economy right now, The most important ones
are related to globalization. Globalization has resulted in offshoring and outsourcing, these two
components indeed has bought significant profits to american corporations at the cost of ordinary
american jobs.
Economists in general liked this model in the beginning, but the pilot projects of off-shoring
have just blown out of proportion causing endless harm to western economies, Millions of
people who were working as ordinary men and women simply lost their jobs and left to fend for
themselves.
Trillions of dollars worth of goods flowed freely across the seas, creating trillion dollar debts that
can never be paid back.
Simply put Economy right now is in a bad shape and it needs huge work around. Fed reserve just
kept intrest rates very low so people could borrow more money to let economy function, but this
has created huge bubbles in 2008 destroying enormous wealth, manufacturing cities are already
empty and dysfunctional.
Economy right now is taking much longer to recover, There are signs of non-recovery. Federal
reserve right now is left with no other option than rising intrest rates,
Rising intrest rates is a big negative for the economy as many people will be ineligible for new
housing loans and many comapnies will have to pay higher intrest on their loans.
How did we get here ?
Federal reserve used almost all tools over decades to earn growth for the country and create new
jobs, This had indeed created housing bubble where borrowers could easily borrow money to
invest in useless assets.
This lasted well for decades before finally ending in 2008. In 2008 most of the banks in home
loan business went bust, this crisis has spread across the world exposing most of the world
economies.
When banks went bad, lending too stopped which stopped entire economic activity around the
world causing global economic crisis. Its as simple as logistic line, It went all the way from US
to Asia.