Post 21: Vocab Terms List

Pg 235:

·         National income accounting – refers to the bookkeeping system that a national government uses to measure the level of the country's economic activity in a given time period.

·         Gross domestic product - The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis.

·         Output expenditure model - total output responds to the demand for it.

·         Personal consumption expenditure - payments by households for goods and services.

·         Gross Investment - Gross private domestic investment is the measure of investment used to compute GDP. This is an important component of GDP because it provides an indicator of the future productive capacity of the economy.

·         Nominal GDP - GDP as actually measured, thus in current dollars. Contrasts with real GDP.

·         Real GDP - Real gross domestic product (GDP) is a macroeconomic measure of the size of an economy adjusted for price changes.

·         Price Index - an index that traces the relative changes in the price of an individual good (or a market basket of goods) over time.

·         Underground economy - An expression used to describe all market exchange that goes unreported either because it is illegal or because those involved want to evade taxes.

·         Gross national product - former measure of the United States economy; the total market value of goods and services produced by all citizens and capital during a given period (usually 1 yr)

Pg 240:

·         Business cycle - The pattern followed by macroeconomic variables, such as GDP and unemployment that rise and fall irregularly over time, relative to trend. There is some tendency for cyclical movements of large countries to cause similar movements in other countries with whom they trade.

·         Expansion – a period of economic growth.

·         Peak – a high point.

·         Contraction – a recession.

·         Recession – is a decline in real GDP for months or more.

·         Depressions – are prolonged and severe recessions.

·         Trough – occurs when demand, production, and employment reach their lowest levels.

·         Leading indicators – anticipate the direction in which the economy is headed

·         Coincident indicators – change as the economy moves from one [phase of the business cycle to another.

·         Lagging indicators – change months after an upturn or a downturn in the economy has begun and help economists predict the duration of economic upturns and downturns.

Pg246:

·         Real GDP per capita – related to all economic indicators that are calculated, usuallyat the end of a fiscal year.

·         Labor Productivity- Work force productivity is the amount of goods and services that a laborer produces in a given amount of time.

·         Productivity growth – a measure of output from a production process, per unit of input

·         Capital-to-labor ratio – for example, labor production is typically measured as a ratio of output.

·         Capital deepening – a term used in economics to describe an economy where capital per worker is increasing. This is also referred to as increase in the capital intensity.

 

Post 20: test corrections

Reviewing facts

Q1: B; H, National income accounting tracks assumption, income, and production in a nation’s economy. (pg. 229)

Q2: (blank); A, nominal GDP is current GDP (pg. 232).

Q4: A; B, Real GDP is used as the primary measure of the U.S. economy until1991 (pg. 232).

Q5: (blank); I, the business cycle explains changes in economic activity that occur in a market system, measured in terms of increases and decreases in the GDP.(pg. 236).

Q7: F; G, coincident indicators are economic variables that occur along with changes in the economy. (pg. 240)

Q8: G; F, lagging indicators are economic variables that occur months after changes in the economy. (pg. 240)

Identifying ideas

Q2: business cycle; product market, four sectors of the product market combine to make up GDP. (pg. 230)

Q5: (blank); gross, because it does not include depreciation, gross domestic product is a more representative measure of a nation’s actual output of new goods than GDP.

Q9: (blank);tax base, an expanded tax base is a benefit of economic growth that gives government more money to spend on such things as education. (pg242)

Understanding ideas

Q4: B; A, GDP figures are sometimes inaccurate because gathering data is a slow process. (pg233)

Q7: B; A, personal income is an example of a coincident indicator. (my blog)

Matching

Q1: B; D, the process of tracking production, income, and consumption in a nations economy is national income accounting. (pg229)

Q2: (blank); B, GDP expressed in the current prices of the period being measured is nominal GDP. (pg232)

Q4: G; F, the total dollar value of all final output produced with factors of production owned by residents of a given country during one year. (pg231)

Q12: N; S, an increase in the amount of capital goods available per worker is capital deepening. (pg245)

Open ended

GDP	=	Consumption
	+	Investment
	+	Government Purchases
	+	Net Exports

Consumption is the largest component of the GDP. In the U.S., the largest and most stable component of consumption is services. Consumption is calculated by adding durable and non-durable goods and services expenditures. It is unaffected by the estimated value of imported goods.
Investment includes investment in fixed assets and increases in inventory.
Government purchases are equal to the government expenditures less government transfer payments (welfare, unemployment payouts, etc.)
Net exports are exports minus imports. Imports are subtracted since GDP is defined as the output of the domestic economy.

Post 25: Who would like inflation?

College students love inflation.
Lets say a college student takes out a loan from a bank that has a contract to be paid back within the next 30 years. if the loan is for $50,000, 30 years later $50,000 dollars isn't worth as much as it would have been when the loan was taken out. This is caused by inflation. College loans are made easier to pay off for young adults because of inflation. Yay inflation.

Post 24: the 4 types of unemployment

4 different ways i could become unemployed in the near future.......hopefully not.

I have become a food sorter for a zoo in California, The zoo has recently attained a sorting machine that can read the labels on the food bags and slide it to its correct pile. The zoo no longer needs me I am now structurally unemployed.

I work in the Reptile exercise yard at the Philadelphia Zoo. I am enjoying every second of it. unfortunately once the outside temperature goes below 70 degrees none of the reptiles can handle being outside. I am now seasonally unemployed.

I was working in a small hometown petting zoo with some small exotics and large common species of animals. Through my program at college I was offered an internship as a animal trainer, and caretaker at a major zoo in Florida. I had to prove that I had not had a job and had been focusing on my studies for at least a month. So, from the time I quit my job at the petting zoo to the time I was accepted to work at the zoo in Florida i was fictionally unemployed.

I am currently employed by an animal rescue down at the BP oil spill. They hired thousands of workers to help the cause. Now that the animals are all cleaned up and they only need a few workers to finish the job, they have released the excess help. I am now cyclically unemployed.

Post 23: Wanted Dead or Alive

Post 22: Quizzes

Frictional unemployment - unemployment attributed to workers moving from one job to another

Discouraged workers - people who want jobs but have stopped looking for work for job-related reasons

Marginally attached workers - people who once held productive jobs but have given up looking for work

Census Bureau - conducts a monthly study called the Current Population Survey

Not in the labor force - anyone who is not classified as either employed or unemployed

Aggregate supply - is the total amount of goods and services produced throughout the economy

A Supply shock - is an event that increases the cost of production for all or many firms.

To construct the consumer price index, the Bureau of Labor Statistics selects a sample of commonly purchased consumer items, called the Market basket

As the value of the dollar decreases, the purchasing power of people who rely on fixed income will fall.

High interest rates lead to less consumer spending.

The income gap between the richest and the poorest Americans was wider in the 1990s than at any other time since World War II.

In 2000 the poverty threshold for a family of four was $17,761.

The poverty threshold is the lowest amount of income a family needs to survive on the bare minimum.

The poverty rate is the percentage of individuals or families that are living in poverty.

To measure the amount of inequality in the distribution of income, economists plot a Lorenz Curve.

One suggestion for improving income equality is raising the minimum wage.

Twitter Post

Link 1

I like this website because it is organized well. It explains each vocabulary term used in the text and is very easy to navigate. The website uses pictures to keep your attention and is a low level reading so its not very hard understand the information.

Link 2

This website is like an economic dictionary! 1 huge glossary of terms. Even within all of the definitions are links to more definiitons. Vocabulary is some of the hardestthings to rememeber sometimes so this website would be very helpful to me.

Link 3

Books books books. This website uses children's to explain economics. An interesting way to illustrate the art of economics.Thereare also links to games that help jog your memory for the simple information.

Post:19

Post 17: Awesome Buisness Cycle Award

 This chart is too plain. It is straight to the point, but does not have a lot of information to offer. This chart does not explain or giveexamples of whateach checkpoint of the chart means.

This graph is colorful and shows how our economy is a constant rollercoaster it just cant make up its mind. But it doesnt explain what is causing these fluctuations, so i didn't pick this one.

This chart does a very nice job at showing how outside influences change buisness. It includes was causes fluctuation, how changes are made to fix the low points, and what we the economy does a ta high point. Colorful keeps my attention. Italso makes me think about Mr. Campbell using this is his powerpoint and commenting on how he wishes he could make a graph like this. I give this Graph the Awesome award.

Post 16

For my visual for Chapter 10 I created a Study Stack. a website you can play games with flashcards.

Post 15

Leading Indicators – change before the economy

·         Building permits

·         Money supply

·         Inventory changes

Coincident indicators – occur directly with the economy

·         Personal income

·         Employment

·         Demand

Lagging indicators – changes after the economy

·         Unemployment rate of the country

·         Labor costs

·         Business spending

Post 9: Technology Essay

Technology

Growing and spreading all over the world.

How something rolls, turned into what’s the fastest way to get an entire business’s income from china to the states.

Technology has not only sped things up, but made the world more efficient.

Saving time and saving lives.

Life expectancy has grown from 48 to 78 in 100 years.

Progress in medicine has developed from penicillin fixes everything, to chemo, and stem cell research to replace lost limbs.

It has shaped America into what it is now.

Technology attracted people from all over the world.

Where there is technology there is hope.

Post 14: Reaction to Economic Videos

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.

Buisness Cycles

13 things I learned for Post 13

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.

Post 12: What's wrong with GDP?

·         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.

Post 11: Caclulating GDP

The basic formula for calculating the GDP is:

Ingredients:

Calculate

·         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)

Rules:

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.

Post 10: Chapter 10 Reading

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.

Post 8: Malcom Gladwell Video

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.

Post 7: Examples of the 4 types of Monopolies

Natural monopoly - Sewage industry
Geographic monopoly - One general store in a town
Technological monopoly - A drug patent.
Government monopoly - The government controls the water system.

Post 5: Break Up The Turnpike Monopoly !

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.