Link : http://www.vancouversun.com/business/fp/story.html?id=1393636
Summary
The article talks about how the credit card companies have a 2% average fee for retail owners for the usage of the ability to offer credit cards as a way of payment. Before last June, the rate of interchange fees where ranged from 1.6% to 19% and premium cards at 2.3% to 2.5%. Theses percentages can affect the costs of small businesses that are trying to allow credit cards. If small businesses owner don't use the credit card machines, then they could lose some business because in modern days, many people use credit cards or debit cards because it’s an easier way or carrying money.
Relation
This relates to ch.7 because it is essential to have currency in order to continue on day-to-day business activities. Everyday things such as food, clothing, entertainment and other things, require money from people. The business sector desires money in order to get the kinds of services it wants. This need for money is referred to as a transactions demand. A transaction demand is the money required to accommodate a firm's expected cash transactions. The fact that there is an increase in the unemployment in our economy may be because the demand for money is not as high as it use to be years ago. Supposedly it is easier to earn quick cash on small odd jobs and many people don't want to work in the foods and beverages industry because it is seen as a "bad" job for those who don’t have good education. The supply of money in our economy is an important indicator of economic conditions. It shows the amount of purchasing power available.
Personal Reflection
I personally think that the usage of credit cards and debits cards are important for the circulation of money. Credit cards can be easily stolen but they allow people to borrow money which allows them to spend more money. The lent money will also be charged by the credit company so that they can receive money as well. The problem with credit cards is that they seem way too unsafe to carry because anyone can just use the credit card unlike a debit card. A debit care in my opinion is safer and better because you don’t have to pay for the loans part of a bill because you do not loan any money, a person would just spend their own money. Also, if a person were to have their debit card stolen, then the person would also have to know the debit card PIN number to allow access to the card owner’s cash box.
Monday, March 30, 2009
Thursday, March 5, 2009
Chapter 6
Link: http://www.economist.com/finance/displaystory.cfm?story_id=13240636&CFID=45434287&CFTOKEN=42455415
Summary
In Japan they are spending more then the average American household and so Japan's trade balance went into a shortage last year. From the six months to January, Japan had a annualized trade shortage of ¥4 trillion which is equal to $39 billion. This is a big shift compared to the surplus of ¥11 trillion the year earlier. Japans foreign investment is also shrinking thanks to the lower dividends and interest rates. Most economists think that Japan will have a reduced GDP of 1%, down from the 4.8% in 2007. The saving rate of a household in Japan went from 18% of income in 1980 to about 1% last year. In contrast, the American saving rate went up to 5% in January because of the tight credit and falling wealth. As the population continues to age, the household savings will go even lower and even perhaps into negative because the retired live off their large stash of financial assets.
Connection
The connection between this article and the textbook is the situation of saving and spending. The more a household saves, the less income is going into companies. When companies receive less income, they either cut back on the wages of employees or increase the prices of their product. Once companies have increased their product, then people will have to pay more for the item This creates a paradox of thrift. If a person chooses to save money in a place where they don't gain interest, their spending power is decreasing. A person who lends money will lose money if the prices of things are going up. The person who borrowed the money has the advantage because they only have to pay back the money that is worth less now. Japan is saving less money and spending more so they have a shrinking surplus.
Reflection
This reflects us because Japan is a very big economical supplier for everyday things that people use. Since Japan might have some economics issues later on, things that that are usually supplied by and made in Japan will be more costly. I think that as long as the Japanese people realize that they need to save more money, they can start to help rebuild their falling surplus problem. The exports that they have are important part of their income. Japan has usually had a good economical status where their money issues are okay. But since a few months til now they seem to be getting into some trouble. If Japan ends up having too big of a trouble to handle, things can get to be very costly.
Summary
In Japan they are spending more then the average American household and so Japan's trade balance went into a shortage last year. From the six months to January, Japan had a annualized trade shortage of ¥4 trillion which is equal to $39 billion. This is a big shift compared to the surplus of ¥11 trillion the year earlier. Japans foreign investment is also shrinking thanks to the lower dividends and interest rates. Most economists think that Japan will have a reduced GDP of 1%, down from the 4.8% in 2007. The saving rate of a household in Japan went from 18% of income in 1980 to about 1% last year. In contrast, the American saving rate went up to 5% in January because of the tight credit and falling wealth. As the population continues to age, the household savings will go even lower and even perhaps into negative because the retired live off their large stash of financial assets.
Connection
The connection between this article and the textbook is the situation of saving and spending. The more a household saves, the less income is going into companies. When companies receive less income, they either cut back on the wages of employees or increase the prices of their product. Once companies have increased their product, then people will have to pay more for the item This creates a paradox of thrift. If a person chooses to save money in a place where they don't gain interest, their spending power is decreasing. A person who lends money will lose money if the prices of things are going up. The person who borrowed the money has the advantage because they only have to pay back the money that is worth less now. Japan is saving less money and spending more so they have a shrinking surplus.
Reflection
This reflects us because Japan is a very big economical supplier for everyday things that people use. Since Japan might have some economics issues later on, things that that are usually supplied by and made in Japan will be more costly. I think that as long as the Japanese people realize that they need to save more money, they can start to help rebuild their falling surplus problem. The exports that they have are important part of their income. Japan has usually had a good economical status where their money issues are okay. But since a few months til now they seem to be getting into some trouble. If Japan ends up having too big of a trouble to handle, things can get to be very costly.
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