DISCUSSION POST MUST BE 10+ SENTENCES AND THE PEER REVIEWS MUST BE 7+ SENTENCES PLEASE USE YOUR OWN WORDS AND DO NOT COPY FROM OTHER SITES STAY ON TOPIC ,BE POSITIVE , AND DO NOT COMMENT ON GRAMMAR ERRORS. TALK DIRECTLY TO CLASSMATES IN PEER REVIEWS!!! YOU MUST COMPLETE BOTH PEER REVIEWS AND DISCUSSION QUESTION!! THANK YOU
1) DISCUSSION QUESTION
“Using the Rate of Inflation to Make a Decision”
In Chapter 4 of The Little Book of Economics, Ip talks about the natural rate of unemployment as the rate of unemployment that will not lead to an acceleration in inflation. Keep this reading in mind as you respond to this weekâ€™s discussion questions.
- Think about this: If the current unemployment rate is 3.9%, would one expect the rate of inflation to increase or decrease? Explain your answer.
- Now you face a wonderful decision. Imagine that you just won a lottery jackpot of $100,000. If you expect inflation to accelerate, should you buy that home youâ€™ve been thinking of now? What would you decide if the rate of inflation is negative?
Reply to a peer and share your opinion about their decision.
2 PEER REVIEW #1 (LANEATRICE)
This one is a little tough for me, I am aware that in the state of Georgia the rate decreased just a little from last year to this year. However, it’s reasoning in my opinion is that times are hard and people are desperately trying to make ends meet for their families. People are settling for lower paying full time jobs and juggling 2 and sometimes 3 jobs at a time to keep food on the table and a roof over their families heads. I know of several businesses that were either shut down, moved to another state, or did large layoffs and those salary based employees couldn’t find jobs of equivalent pay so they’re working lower payed jobs. Many people have qualified experience but are turned away for not having a bachelors, or masters degree. I am currently obtaining my degree because I have missed promotion opportunities for not having a bachelors or masters degree and I’m all for education but it’s sad to be back into a corner of debt just to get by.
If I won a lottery jackpot of $100,000, with the expectation of inflation to accelerate my decision to purchase a home would be carefully weighed by the rates offered for this purchase. This may not be the time to purchase the home that I’ve dreamed of, this may be the opportunity for me me to purchase a fixer upper home that I can flip for profit to go towards purchasing the home of my dreams. $100,000 isn’t much when considering a home purchase and it’d be awful to get locked in at a high rate and high mortgage just because I wanted the home. I think I’d rather consider some business opportunities with that money to set myself up in a position to put down more money for my dream home at a low rate and affordable mortgage.
3) PEER REVIEW #2 ( MATTHEW)
I think we would see accelerated inflation with unemployment at 3.9%. That is a very low (good) unemployment number, but it comes with a cost . With unemployment low, potential employers are empowered to demand higher wages as they are in high demand. And to come up with the money to pay new employees more money, they drive up prices to consumers, which in turn accelerates inflation.
If inflation was expected to accelerate, I would definitely buy my house now. With inflation accelerating, My $100,000 is worth more now than it will be after inflation when prices go up. It would be a smart investment to get that house bought now, with lower interest rates and your money being worth more now than it will be after inflation. If the rate of inflation is negative, than yes I would wait and hopefully home prices will be driven downward, making my $100K do a lot more for me.