NUST BUSINESS SCHOOL (NBS)

Fall 2023
COURSE: Intro to Bank Management (FIN-403), BS ACF-2K20
(Assignment 1)

Name: Shanzay Babar

Answer 1- Something strange is going on in rich countries, especially in the United States. The money
the whole country makes, called GDP per person, stays about the same from year to year. But the
money regular families make is going up and down a lot more than before. In other words, families now
have a bigger chance of their money going up and down, even though the whole country's money is not
wobbling as much.

Why Is This Happening?

1. Some People Are Getting Much Richer: A few rich people are getting a lot more money,
and this makes the gap between them and everyone else bigger. When things go wrong
in the economy, the regular folks get hit harder because they don't have the extra
money to fall back on.

2. Different Kinds of Jobs: There are new types of jobs, like gig work and part-time jobs,
that don't offer the same security as regular full-time jobs. So, families depend on more
uncertain jobs, which can lead to unstable incomes.

3. The World Is Connected: Our economy is connected to the whole world. When
something bad happens in another country, it can affect us here. Different parts of the
country are also affected differently by these changes. For example, factories closing
down in one place can hurt people there a lot.

4. Investing in Stocks and Stuff: More people are investing their money in things like
stocks. But these investments can go up and down a lot, which makes family incomes
less predictable.

5. Less Help from the Government: In some countries, the government isn't helping
people as much when things go wrong. There are fewer programs to give money to
people who lose their jobs or need help with healthcare, so families are more on their
own.

How to Fix It?

To make things better, we can:

1. Tax the Rich a Bit More: We can make rich people pay a little more in taxes to help
others who aren't as well off.

2. Make New Job Rules: We can create rules to make sure people in gig jobs and part-time
jobs get good benefits like healthcare and retirement savings.

3. Teach People More: We can help people learn about money so they can manage it
better.

4. Protect Our Savings: We can make sure the money we invest is safe and doesn't go up
and down too much.

5. Help People When Things Go Wrong: We can have programs to give money to people
who lose their jobs or get sick.

6. Create Jobs in Different Places: We can work on creating jobs in areas that are hit the
hardest by changes like factories closing.

7. Raise the Lowest Pay: We can make sure that even the lowest-paying jobs give people a
more stable income.

By doing these things, we can make the economy more stable for families, even when the
whole country's money isn't wobbling much.

Answer 2- Some folks say we should stop using paper money and go fully digital. Here are the reasons
people like and don't like this idea:

Why Some Like the Idea:

1. Stop Bad Things: Paper money can be used for bad stuff, like avoiding taxes or doing
illegal things. If we stop using it, it might be harder for people to do those things.

2. Make Money Work Better: Digital money can help the people who control money (like
the government) do a better job. They can change how much money is worth more
easily, which can help the economy.

3. Catch Cheaters: Digital money is easier to watch, so it can catch people who try to cheat
with money.
 4. Easy and Fast: It's often easier and faster to use digital money for everyday things like
shopping or paying bills.

Why Some Don't Like the Idea:

1. Lose Privacy: If we use only digital money, everything we buy or spend money on can be
tracked. Some people don't like others knowing everything about their money.

2. Not for Everyone: Not everyone has a bank account or the internet. Using only digital
money might make it tough for them to buy things or get paid.

3. Tech Problems: Digital money can have problems if the technology fails or if someone
tries to steal it. Cash can still be used when there are problems.

4. Hurt Savers: Some people worry that if we use only digital money, the government
might charge us for keeping our money in the bank (negative interest rates), which
could hurt people who save their money.

5. Big Change: Switching from paper money to digital money is a big change and could
cause issues.

At last, deciding whether to get rid of paper money is complicated. It's about thinking about
privacy, who might get left out, and what's best for the economy. It might be a good idea to
find a balance, where we use both digital money and cash, so people have choices and can keep
some of their privacy.