Chapter 1 - Scarcity and Opportunity Costs Revised

The article:http://ap.google.com/article/ALeqM5h5JRwPgiiw1s1OQ2nMg0svKpPEZwD939H3FG0

The value of gold in New York was briefly increased over $900 an ounce on Thursday, September 18th, 2008. The rapid increase in the price of this resource from Wednesday to Thursday was the largest one-day increase ever. Possibly the most important thing that resulted in this was the advantage the government took of this resource. The government recognized the opportunity to save their banks from the debt that has been following them for a while now. Although gold seemed to languish for a while, it recently proved to regain its valuable power. Not only did the gold help the government, it also helped investors, as they often find gold as a safe place to put their money. Another advantage is that the gold is known to hold a fairly consistent value, even over a long period of time.

My article is mostly about how the value of gold has been consistent throughout time. Gold is a scarce resource that alters in value from time to time. On September 18th, the value of gold greatly increased, and the government took advantage this situation and used this resource to pay for their debts. This connects with two topics in the textbook. First of all, the government had to make a decision on how to use this resource. This ties into economics because a part of economics is about making decisions on using scarce resources. Secondly, because the government chose to invest their money in paying bank debts, opportunity costs appear. Some opportunity costs would be that the government is now unable to do other things with that gold or money. The opportunity of having roads fixed, or building new schools is now lost.

Personally, I think the country was very lucky there was an increase in the value of gold, and that paying the debts would have improved the economy in a way that the banks will now be able to lend out more money. Despite this, though, I also think it was really unfortunate that the government had to put the gold into paying their debts. I think it would have been a greater contribution for the people of the country if that money was spent on something more useful, such as fixing roads, or building things to improve the living environment. I could understand how this could be a difficult decision for the governemnt, but I think the opportunity costs of using the gold to help the citizens directly has a greater long term effect. I'm quite curious on what the government will decide to do next, if there ever will be another rapid increase in the value of gold.