Question

1. What were three mechanisms used by Americans to maintain their living standards as real wages stagnated for decades? What are the social/economic consequences of these mechanisms?

2. What is the Federal Reserve’s justification for the 2% target inflation rate? What can be criticized about that strategy?

3. Summarize the economic assessment of the labor market and price level as reported by the most recent FOMC statement.

4.

Immigration

1. List the losses and gains of immigration to the US?

2. Why is it hard to calculate the net gain or loss?

3. What is the second generation phenomenon

4. Why does immigration flow continue as an international phenomenon

Answer 1

1.The mechanism by which the US measures it's living standard is the United Nations Humen development Index(HDI) in which the education, life expectancy and expected years of schooling. According to the HDI report 2018, United States ranks at the 13th number with the following stats combined score is 0.924, life expectancy at birth of 79.5 years, expected years of schooling 16.5 years and GNI per capital is $54941.By this mechanism the real wages have been staganated in US for decades. There are many social/economics consequences of these mchamism which are a) it helps to improve living standard b) it keeps the real wage rate constant c) it gives the proper idea of the development, etc.

2.Federal Reserve recently decided to keep the inflation rate at 2% level with the help of the inflation traget policy. By keeping the inflation rate at 2% the Federal Reserve trying to keep real price level, real wage level and employment fixed. They have taken this step to try to keep the macroeconomics variable not to fluctuates more than it's set. There are many criticism of this Federal Reserve approach like it will not give the good return to the investors in short run, there may be chances of increasing in unemployment since the investment will not be encouraged, etc.

3. The recent economic assessment is reported by the Federal Open Market Committee (FOMC) on wages and price level are a) FOMC mentioned the real wage rate has been declining since the price level is increasing b) the wage rate and price both has to keep maintained c) FOMC also suggested the use of monetary policy to keep them at the targated level.

4.(a) The list of gains from immigration are it helps to increase in human capital of the country, it give them opportunity to utilise the different talent for the growth, it helps to improve in their GDP, it helps to contribute to their development, etc.

The list of losses of immigration to the US are immgrants takes the job of US residents, immigrants reduces the real wage rate since they are ready to work on any wage level, immigrants earn from US but sends money back to the home which reduces the US per capital income, etc.

b. It is very hard to calculate the net gain or loss because it is qualitative terms which gives the difficulty to calculate the net gain or loss

c.Second generation phenomena means to discard the old fashion technology or method and adopt the modern technology or method by which the development of the country growth improves.

d. Immigration has become the international phenomenon recently due to the huge immigartion from the middle East country to the European countries, US, Canada, etc. This phenomenon has increased due to the many disturbance in terms of economics losses, deaths, etc.