1) Who gains and who loses from rising house prices? The economy of the real estate market is naturally flexible in nature in terms of the relationship between its factors of price, demand, and sales. In the changing behavior of these main factors alongside the other significant ones causes the flexible nature in the real estate market thus, causing the rising and dropping of the value of the product involved in this economy. In general, one of the most flexible element in this economic concern is the price of the real estate product as the changes in the other factors causes the fluctuations in the value of the of the real estate product.
As the value of the house product changes, its price factor which is dominantly dependent on this former also changes. When the prices in the real estate economic market fluctuate, respective parties involved either benefit or lose from this change depending on their perspective on the matter. In particular, the owner, the person who recently bought, and the current seller gain from the rising house prices as the value of their property indeed increases from its initial value of when they acquired it.
In this aspect, at the period that they will sell their property, they can already realize a profit from it which is the increased price or value of the house compared to the amount they initially invested on it. On the other hand, the initial losers from this change are the parties who sold and the people still buying. The former initially lose as they already forfeit the opportunity of holding the increased price or value of their property. The latter will indeed and has to incur additional financial burden as they must adjust to the increasing price of real estate product.
With this, the parties involved in the real estate market business must indeed deal with the changing prices and values of the product in this aspect. 2) If more teenagers stay in school longer, what happens to: (a) production possibilities? The ideal event wherein more teenagers will stay in school longer will indeed have a significant impact on the current economic condition. This change will result to a certain fluctuation in the production possibility curve wherein it will likely concave on a certain point thus, decreasing the possible output of the economic situation.
As teenagers will stay in school longer, their involvement in the employment market and economic production realm will be decreased thus reducing collectively the output possibility. However, this effect will also be temporary as the market will also adjust to this event such as the burst increase at the point wherein the said teenagers will finish their studies and enter the employment market. (b) unemployment rates? The event wherein more teenagers will stay in school longer also has a significant event in the unemployment rates possibly reducing this rate to a sustainable rate.
As the teenagers will stay longer in school, their involvement in employment will likewise be delayed and thus lessening the applicants and workers in the employment field. At this point, the number of people searching for jobs and those who do not have one will be reduced as the greater portion of the teenage population will stay in school longer. 3) Why is frictional unemployment deemed desirable? Frictional unemployment is considered as another innate condition in the economy thus, cannot be eradicated or reduced.
In a certain perspective, economist often deemed this condition to be more desirable than the other types of unemployment as its main causes are not anything detrimental but is rooted in the behavior and characteristics of the economy. Frictional unemployment is merely the result of the transition in the economic development wherein some people try to change job or career making them in between economy yet, they still posses their respective skills and requirements. Frictional unemployment is generally rooted on time constrain as an innate behavior of the economy.
Because of this, frictional unemployment is likewise temporary as the people involved in this statistics are still highly-qualified and skilled workers and employees thus, they will eventually find a certain job on the market. In view, this unemployment statistic reflects only in practical proportion of the collective work force and it does not exceed the said level. 4) Can we increase consumption in a given year without cutting back on either investment or government services? Under what condition.
In the macroeconomic perspective, there are situation wherein the market can induced a certain or drastic change through the manipulation of the significant elements and factors involved in its midst. For example, increasing the level of consumption in a given year can be done through manipulating the other elements involved in the said matter to realize the increase interest. However, it is also possible to manifest the increase in consumption without altering the investment or government services particularly when the said change is localize only under a given time period.
Doing this would only require some condition which are dependent on the current situation and condition of the market such as one experiencing a sustainable inflation, an effective growth, or with an overflowing monetary volume. With these situations, a market can significantly increase its consumption without affecting the other factor as this is likely an approach of achieving equilibrium in the economic scope.
Bibliography
Schiller, Bradley (2007). The Macro Economy Today. McGraw-Hill/Irwin Publication. 11th Edition. ISBN-10: 0073287113.