Discussion Boards Sample

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DB6 Please read the Focus section (page 120) entitled Bank Runs, discuss and summarize the main ideas in at least two paragraphs.
Bank runs are a condition where banks close down after depositors or liquidity providers withdraw their deposits. Let take an instance where there is a healthy bank. A bank that has a history of giving good loans. A rumor or speculation is made that this healthy bank is about to collapse. This will instill fear in depositors who are afraid of losing their money and as a result, they go to the bank to withdraw their deposit and close the account. The bank Spends their deposit to give out loans that cannot be asked back so fast and the assets cannot sell immediately, the bank will be fixed to close. This is what is referred to as banks run, a situation that affects several banks as well as other lending institutions a situation that has characterized most banks in America before 1930.
Several measures have been put in place to control this incident of bank runs. The first solution is called narrowing down. This is a condition where banks are restricted from holding liquid and safe government bonds like T-bills and ensuring that loans are done by financial intermediaries other than banks. However, despite the ability of narrow baking to eliminate runs on banks, experts warn of the situation changing to shadow baking thus causing runs on these intermediaries as well. Practically running on banks in the United States has been approached in two stages. One is limiting the banks to ensure that a bank run doesn’t happen, for instance by the provision of federal deposit insurance, which provides a limit at which banks should take a deposit and covers them. This on the other hand gives banks the freedom to borrow from other sources which would still lead to running on the banks in the event the wholesale funders demand their money.DB7 After reading and studying chapter 7, please discuss the following questions in at least two paragraphs each:1) On pages (144- 145) read the "FOCUS" section entitled Henry Ford and Efficiency Wages. In light of that reading, discuss and explain the efficiency wages theory.
According to the above excerpt, Henley Ford decided to increase the wages of his ford company employees from less than 3 dollars to 5dollars a day, which was relatively way higher than the market wage rates. The effects of this were increased rate of employee retention, increased productivity, and reduced absenteeism. The excerpt explains that this is an ideal illustration of the practical application of efficiency wage theory. Before the announcement by Henly, this discussion statistically shows that the rate of monthly turnover was at 31% translating to a whopping 370% annually. This implies that 31% of employees used to leave employment every month( Daniel, Lawrence, 1987). Similarly, before the announcement, the layoff rate was at 67% which implies that out of a hundred employees, 67 were played off every year. After the announcement, both the turnover and layoff rates collapsed down to 16% and less than 1% respectively. These marginal reductions of both turnover and layoff rates as well as improved productivity is what explains the idea behind efficiency wage theories.
Efficiency wage theory is an idea that suggests that increasing wages can lead to increased labor productivity because workers feel more motivated to work with higher pay. It explains that raising employees' wages above the market rate is profitable enough to recover the costs from the high productivity. This is because when wages are raised the are various levels of motivation that play part in changing their altitude towers their roles from negative to positive. They become punctual, they work hard, they maintain integrity thus reducing the cost of supervision, they reduce the rate of absenteeism which translates to more working hours.
2) Discuss and explain how a reduction in the unemployment rate will affect bargaining power and nominal wages.
Unemployment is highly related to bargaining power and nominal wages. Studies show, every employer will seek profit maximization in a business. This explains that when low wages are efficient there is no reason to pay high. Similarly, if the benefits of unemployment are more then the economy will choose unemployment (Bräuninger, 2000). This explains that bargaining or high wages can only bear fruits if there is no efficient low-wage labor.
This can be practically be explained that if many people are unemployed they are
looking for any available job for any pay. This means that bargaining power is low. This is because the basis for a high wage is the treat of living the job and getting another one. This threat has no logic in a high unemployment rate economy (Josh,2018). On the other hand, if the rate of unemployment is low then the bargaining power goes high, and nominal wages increase. This is because can threaten of quitting if not well paid since they can secure a better job.DB8 Please discuss and answer the following questions in at least two paragraphs each.1) Discuss and explain what is meant by the "wage-price" spiral.
The wage-price spiral is an economic concept that is used to explain the relationship between wages and prices of commodities. It is a concept employed to answer the question of what would happen if employees demanded high wages or if the companies raised the prices of commodities. The wage-price spiral, therefore, refers to the macroeconomic theory that show as the cause-and-effect relationship between rising wages and rising prices or inflation( Robert 2021).
It shows that, after an increase in aggregate demand, the process of adjustment of nominal prices and nominal wages results from attempts by workers to maintain or increase their real wage and by firms to maintain or increase their markups of prices over wages ( Blanchard 1986). This simply explains that if wages are raised, there is an increase in disposable income thus leading to more demand. When there is high demand, the prices go high resulting in inflation.2) Based on your understanding of the Phillips curve, explain what happens to actual inflation (relative to expected inflation) when the actual unemployment rate is either above or below the natural rate of unemployment.
Philips curve is used to show the inverse relationship between the unemployment rate and inflation. In the short run when unemployment increases the rate of inflation decreases. This makes the Philips curve take an L-shape. Philip developed this curve he tracked wage changes and unemployment changes in Great Britain from 1861 to 1957 and found that there was a stable, inverse relationship between wages and unemployment.
In the long run, the Philips curve shows as a vertical line at the actual unemployment rate showing no relationship between the unemployment rate and inflation in the long run. It e...