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Dangers of the World Economy

3 paragraphs

1. I would like you to list a few major challenges YOU THINK would impact the future economic well-being of the United States. Explain why these are crucial challenges and how they can be overcome? Your response MUST make references to short term fluctuations as well as long-term economic growth prospects. (For example, reference monetary policy and fiscal policy.)

2. As of January, 2014, the U.S. now has the first woman Chairman of the Federal Reserve. Janet Yellen is probably going to continue the Federal Reserve's current policies. Explain how these monetary concerns will affect a business you are currently running. Explain your answer using the theories presented.

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Solution Preview

1) Since I only have 23 minutes to answer this, I will be brief. A major danger to the US economy is if the markets become spooked by the huge US federal defect brought on by the great printing of money by the Fed to purchase bonds in the market. This is a short-term and a long-term problem. In the short-term, panic could make 2007 look like a day at the beach as markets collapse and indebted companies go bankrupt. Long-term results would be cleaning up the mess without creating more debt (no longer an option in this scenario) and, since it is a worldwide problem, there would be a great drop in the world's wealth and ...

Solution Summary

The author discusses the dangers the US and the world faces from current economic policies, including monetary and fiscal policies.