Is Watching Cable News Television Channels Useful For Acquiring Economic Knowledge?

There are many cable news television channels in the world. Some of the more reputable cable news television channels include CNN, Bloomberg, BBC and CNBC. I personally spend a great deal of time watching cable news television channels, particularly CNBC and Bloomberg. As an economics tutor providing economics tuition to college and university students, many people have asked me whether watching cable news television channels is useful for acquiring economic knowledge. My reply to the question is positive.

Macroeconomic Policies

The government has four macroeconomic goals of balance of payments (BOP) equilibrium, high economic growth, low unemployment and low inflation. You can take economics tuition from an experienced economics tutor to learn the goals of the government. However, the four macroeconomic goals of the government may not necessarily be achieved due to many different reasons. For example, in the 2008-2009 Global Financial Crisis, unemployment in many economies rose sharply. In Economics 101, one will learn that the central bank can use expansionary monetary policy to stimulate the economy in order to create jobs. The standard explanation begins with an increase in the supply of money by the central bank. It follows with a diagram showing the supply of money curve shifting rightward cutting the demand for money curve at a lower interest rate. It ends with a rise in consumption and investment and therefore an increase in the total demand for domestic goods and services which will lead to an increase in gross domestic product resulting in a fall in unemployment.

Missing Links

The above explanation may sound good to some people. However, upon closer examination, one will realize that there are several links which are not explained. For example, how will an increase in the supply of money lead to a decrease in interest rates. A person who watches cable news television channels such as CNBC will understand the link between the supply of money and interest rates. This is because cable news television channels such as CNBC regularly invite distinguished guests to express their opinions on the latest economic events and issues and many of these economic events and issues are related to monetary policy. An increase in the supply of money will lead to an increase in the amount of bank reserves. When the amount of bank reserves increases, banks will find it easier to borrow reserves which will decrease the costs of borrowing reserves. In other words, interbank rates will fall. As interbank rates are a key factor that banks take into consideration when they set interest rates, the level of interest rates in the economy will fall. Apart from watching cable news television channels, you can also learn the link between an increase in the supply of money and a fall in interest rates in economics tuition. Economics Cafe is a leading and premier economics tuition centre in Singapore which offers economics tuition tailored to the needs of the individual.

Economic Outlook

As cable news television channels such as CNBC regularly invite distinguished guests to express their opinions on the latest economic events and issues, a person who watches cable news television channels will be better able to form an assessment of the outlook of the economy. This is important as the state of the economy has a direct effect on the wealth of an individual as it affects stock prices, bond prices and exchange rates. It is important to note that different guests may express different opinions and they may have different assessments of the outlook of the world economy. Some guests tend to be more optimistic while others tend to be less so. Therefore, one needs to listen to more guests to be able to form a better assessment of the outlook of the world economy. In this respect, taking economics tuition from a good economics tutor is unlikely to help to a large extent.

Mark Chua

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