Question

Which of the following words or phrases could be placed along the fuse in the cartoon to indicate how global events could ignite the firecrackers?

A. international investment and trade in currencies

B. offshore jobs and immigration

C. multinational corporations and free-market policies

Answer 1

Hmm. The only one that makes even the tiny bit of sense required fora political cartoon is A, because trade in currencies has a direct effect on the effective price of oil, which is already the trigger on one of the fuses. For example, much of the increase in he price of gasoline in the United States over the past 20 years has come not from an increase in the actual cost of oil, measured for example in grams of gold per barrel, but in the steady devaluation of the US dollar. Roughly speaking, the dollar buys a lot less oil (or any commodity sold on the international market) than it used to, so the price of a gallon of gasoline in dollars climbs steadily up.

Devaluation of the dollar has, so far, been largely supply-driven. That is, there has been a significant increase in the supply of dollars, both as actual cash, and as dollar-denominated assets like US Treasury bonds. Both have been substantially increased by the US Federal government in an effort to keep interest rates low, which keeps their own borrowing costs down -- the US government borrows $1 trillion a year, under President Obama -- and also to help goose the domestic economy by encouraging people to take out loans to buy things.

However, the demand for dollars and dollar-denominated assets is insufficient within the US to absorb this supply. So far, foreigners have been filling the gap, e.g. the Chinese government has bought a very large amount of US Treasury bonds over the past 20 years. If this demand on the "internatinoal currency market" were to be reduced, by, for example, China and/or Europe falling into steep recession, then the value of the dollar would fall further and faster -- which would raise the price of oil (and all other imported goods) in the United States considerably. Additionally, interest rates in the US would necessarily rise, and that would make the student loans and other debt items on that firecracker get more expensive.

Answer 2

thank you :)

Answer 3

do you know this one? Real GDP divided by the total population is?