After Mr. Campbell showing us the "My Humps" and the "Buisness Cycle Rap" I thought the rap was better, I could understand and pay attention to it easier. The first video, I found to be a little silly, but it was informative and used all vocabulary correctly. Both were funny but the rap was more straightforward. I enjoyed both videos they were very interesting and amusing.
Wednesday, December 22, 2010
Tuesday, December 21, 2010
10 things I learned when taking our class online practice quizzes.
1. Economists divide gross investment into two subcategories: fixed investment and inventory investment.
2. To measure changes in prices over time, economists use price indexes.
3. Gross domestic product (GDP) is the total dollar value of all final goods and services produced within a country during one calendar year.
4. Personal consumption expenditures is one element of GDP.
5. To calculate national income, economists subtract subsidies and indirect taxes from net national product.
6. The business cycle is divided into four stages.
7. Many economists agree that the level of business investment, availability of money and credit, expectations about future economic activity, and external factors affect the business cycle.
8. Coincident indicators change as the economy moves from one phase of the business cycle to another.
9. Continued economic growth is important to the U.S. for a number of reasons.
10. Without long-term economic growth, a nation's standard of living declines.
11. As people's incomes increase, they generally pay more in taxes.
12. This is the reason that macroeconomists devote a great deal of time to examining ways to stimulate the economy.
13. The capital-to-labor ratio is the amount of capital stock available per worker.
· GDP treats crime, divorce, and natural disasters as economic gain.
· GDP ignores the non-market economy of household and community.
· GDP treats the depletion of natural capital as income.
· GDP increases with polluting activities and then again with clean-ups.
· GDP takes no account of income distribution.
· GDP ignores the drawbacks of living on foreign assets.GDP is merely a gross tally of products and services bought and sold, with no distinctions between transactions that add to well-being, and those that diminish it. Instead of separating costs from benefits, and productive activities from destructive ones, the GDP assumes that every monetary transaction adds to well-being, by definition. It is as if a business tried to assess its financial condition by simply adding up all "business activity," thereby lumping together income and expenses, assets and liabilities.
On top of this, the GDP ignores everything that happens outside the realm of monetized exchange, regardless of its importance to well-being. The crucial economic functions performed in the household and volunteer sectors go entirely ignored. The contributions of the natural habitat in providing the resources that sustain us go unreckoned as well. As a result, the GDP not only masks the breakdown of the social structure and natural habitat; worse, it actually portrays such breakdown as economic gain.
The New and Improved GPI!
The GPI takes into account more than twenty aspects of our economic lives that the GDP ignores. It includes estimates of the economic contribution of numerous social and environmental factors which the GDP dismisses with an implicit and arbitrary value of zero. It also differentiates between economic transactions that add to well-being and those which diminish it. The GPI then integrates these factors into a composite measure so that the benefits of economic activity can be weighed against the costs.
The GPI is intended to provide citizens and policy-makers with a more accurate barometer of the overall health of the economy, and of how our national condition is changing over time.
The basic formula for calculating the GDP is:
· C - Consumer Spending
· I - Investment made by industry
· E - excess of exports over imports
· G - government spending
Add them all together to = Y - the Gross Domestic Product (GDP)
1) Final Goods - If a log was made into timber which was made into a chair, Only the chair will be counted in the GDP.
2) Imputed Values - Logical or implicit value that is not recorded in any accounts.
3.) Market Price- a security’s last reported sale price (if on an exchange) or its current bid and ask prices (if over-the-counter); i.e. the prices as determined dynamically by buyers and sellers in an open market.
Monday, December 20, 2010
After reading Chapter 10 in our economics books we we’re asked to react and list some things that interest us. I think macroeconomics will be all about the world industry, how companies work together to make the world continue to spin. It helps me to know what makes the product I’m looking at work, but it is also sometimes simpler to just buy it and use it for its purpose. I find that very interesting.
Three things I hope to learn
1) How the big companies that keep our world running started up.
2) How does inflation occur
3) How does the gov’t control inflation.
Friday, December 17, 2010
Malcom Gladwell on the Spaghetti Sauce Industry
Malcom Gladwell made a speech in 2006 on product differentiation. He keeps things interesting and throws in small facts of life that are very intriguing. This speech was on how Pepsi was trying to reform their soft drink to find the perfect “Pepsi.” The correct thing to focus on would be to find the perfect “Pepsis.” This was proposed by a great model Malcom Gladwell looks up to Howard Moskowitz. Howard explained how making 1 product to satisfy everyone, is nearly impossible and not reasonable. He told Vlasic pickle to not make the perfect regular pickle but create a new flavor to cater to a whole new group of people’s tastes. Moskowitz changed the entire spaghetti sauce industry. From 1 flavor of Prego all the way to 36 there is a Prego flavor to satisfy the entire industry.
We were asked as a class to relate Malcom Gladwell’s speech to our current unit in economics. Other companies act in the same way to create or better their own product to be on the same level and compete with other companies. This is called product differentiation making the product more appealing. If two products are close in price the consumer’s decision is based on appeal, taste, sound, and or quality, etc.
Monopolistic competition is when there are many similar products being produced by several different companies. There is a lot of competition in the fast food fry business. Burger King and McDonalds both have the dollar sized fry. So how does the consumer choose, by convenience (which one is closer), taste, appearance, or number of people traveling in and out? There are many things that create competition and appealing to all different groups of people rather than the population as a whole according to Moskowitz, is the most efficient way.
Thursday, December 9, 2010
Wednesday, December 8, 2010
The turnpike is a toll road traveled by thousands of people on a daily basis to get to and from work, or to travel from family to family on the holidays. Regardless of what it is used for it is used A LOT and by A LOT of people. The turnpike is a monopoly. The turnpike is in certain cases the only fast way to get to and from 2 locations. This being the only option for customers, the turnpike has the option to raise prices for tolls and customers have to oblige. The turnpike raising toll prices effects more than just the wallet of the common business man, it adds onto transportation cost for common goods being transported by tractor trailers using the turnpike. So higher tolls = higher transport cost = 5 dollars for a gallon of milk because they have to factor in transportation cost increases. If 295 and 95 are non toll roads and are still in good if not better condition than the turnpike why do we have to pay for one and not the other. I don't see why we have to pay tolls on the turnpike and not on other major highways. I think this monopoly should be broken up. It cost me $13 to go see my family in up state Pennsylvania, and like the MasterCard commercials . . . . that, is priceless. Or at least it should be.
- I learned that in perfect competition in order to be successful many buyers and sellers must work independently.
- When there are a lot of competing companies, producers will spend millions on advertising for their products to persuade the buyers their product is better than the other brands out there.
- If there are any obstacles for entering a business, that market can not compete easily and to its fullest potential.
- Breakfast cereals are considered an oligopoly in the United States. there are only 3 companies that control over 80% of the cereal population ! ! !
- Natural monopoly is when it only makes sense for there to be one business selling a certain product or service, where competition is unrealistic.
- The very first antitrust law passed in 1887 to regulate the railroads monopolistic practices. The owners of the railroad were taking advantage of being the only form of long distance transportation and having extremely high prices, nickel and dimeing every customer for everything. This law was passed to stop that.
- The next major monopolistic run business to be broken up was standard oil. They were undermining their competitors by buying up all the materials to make oil barrels so other company had no way to get their product to customers, they also worked out deals with certain railroads and in turn were receiving discounts on transportation lowering the cost of their product.
- Because the people of America are continuously conniving and can't seem to follow the rules, antitrust laws are still in effect today. Our Gov't still enforces and moniters each business.