The Big Mac Index

One way to get your head around relative currency valuations is to look at what the same goods cost in New York, London, Tokyo, Beijing and elsewhere on the globe. So back in 1986, the Economist magazine created the now-famous "Big Mac Index," a tongue-in-cheek but surprisingly useful way of measuring purchasing power parity, or PPP. It became so popular that academics have written PhD dissertations on it, and it is cited in several introductory economics textbooks as well.

By comparing the cost of Big Macs — an identical item sold in about 120 countries — the Big Mac Index gives you an insight into the relative over- and undervaluation of the world's currencies compared to the U.S. dollar. It does so by calculating the exchange rate (the Big Mac PPP) that would result in Big Macs costing the same in the United States as they do in a particular foreign country.

Your assignment:

Given the following

Country	Price of Big Mac	Exchange Rate:$	Big Mac/Exchange	Over/Undervalued
USA	$4.79	$1 = $1	$4.79/1 = $4.79	Equal
Great Britain	2.89 GBP	$1 = .66 GBP	2.89/.66 =$4.37	Undervalued

First define Purchasing Power Parity. For 2 of the remaining rows, select one of the 120 countries that sell Big Macs and determine if their currencies are overvalued or undervalued versus the U.S. dollar. Be sure to fill in the rest of the row entries for your countries.Do not select a country that has already been taken by one of your classmates. Why are your currencies appreciating or depreciating versus the dollar?
Since we are running out of countries, 6th period will look up the price of the KFC 2 piece value meal, $5.99 in the USA.

Planet Money’s t-shirt, comparative advantage and protectionism. A lesson in International Trade

ntroduction: The purpose of this activity is to reflect on the principle of comparative advantage and better understand how the patterns of global trade are shaped by this fundamental concept. You will watch and read the story of a t-shirt that was manufactured using resources from four separate countries. Next, you will respond to an essay prompt.
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Steps:

1. Read the page that tells the backstory to the Planet Money t-shirt project.
2. Watch the five part documentary 
3. Read the stories behind the t-shirt’s different stages of production:

• Cotton
• Machines
• People
• Boxes

Essay prompt:

A comparative advantage exists when a particular task can be done or a good can be produced at a lower opportunity cost by one nation than by a potential trading partner. When countries specialize in the goods for which they have a comparative advantage, the allocation of resources (land, labor and capital) between nations is more efficient, allowing for a greater level of overall production and income than what is possible without trade.

Carefully explain how the the story of the production of the Planet Money t-shirt demonstrates the principle of comparative advantage.

Thanksgiving Bonus Blog

This is a bonus blog, to make up one you may have missed during the 9 weeks. It will be extra credit for those students that haven't missed any blogs.
Discuss three things that you will be giving thanks for during this Thanksgiving. Minimum 50 words and written in complete sentences.
p.s. one of the things cannot be this makeup blog.

Distilling the Wisdom of C.E.O.s

As we near the end of our semester together, time to start thinking about the future. Check out this article from the NY Times, it identifies some of the characteristics shared by CEOs of corporations. Of those traits listed which one do you think is the most important? List a few characteristics that you think should be added to the list. Of those listed, which characteristics do you feel that you possess, and which ones would you need to work on?

The Fed Chairman Game

Check out this game created by the Federal Reserve. It deals with exactly what we are studying right now, monetary policy. The game puts you in the position of the Fed Chairman, and you must manipulate interest rates in order to balance unemployment and inflation. Click on the learn more button before playing. Investigate the Fed Toolkit and the other items in the help section. After this play the game. Give me a short summary of your strategy and how it went.

Keynes vs. Hayek: The Debate Continues

Read the article and decide which famous Economist you most identify with. Then watch the two youtube videos at:
Fear the Boom and Bust:http://www.youtube.com/watch?v=d0nERTFo-Sk

and Part II of the Epic Battle at:
Fight of the Century: http://www.youtube.com/watch?v=GTQnarzmTOc

Identify at least 3 points from either Economist that you agree with. List the point and the video that it came from. Don't copy your classmates responses.

Is paying kids for good grades a smart idea?

There have been several experiments by school districts at paying students for attendance, good behavior, and good grades. The most recent attempts in Washington, D.C. and New York City have shown some promising results. Money is a powerful incentive. Click on the title link, read the article and leave your thoughts about "money for grades." Posts should be 50-75 words.

A Biter's Market

A Biter's Market
In honor of Halloween, this is a nice little article about kids and incentives. Government policy makers are always looking for incentives to motivate us to act in a certain way. Read the article and respond to at least two of the five questions listed at the bottom of the article. Also can you think of any unintended consequences that might arise from this seemingly well meaning act.

A Course Load for the Game of Life

Greg Mankiw is a professor of Economics at Harvard University. He has written an introductory Economics textbook that is widely used in AP courses around the nation. He has served on the Presidents Council of Economic Advisors, and is a real star in our field. In this New York Times article, he spelled out his advice for the college bound. Read the article and leave your comments. Do any of his points hit home for you? Remember no copying your fellow student's comments.

Illegal Immigration; Not an Economic Debate

Check out this article by Jason Welker about the Economics of Illegal Immigration. It is a refreshing take on an issue that has gotten a great deal of publicity recently. What are your thoughts after reading the article? Is this different from what you have been hearing from both the Republicans and the Democrats lately? Leave your comments before Sunday at midnight.

Consumer Price Index

The Consumer Price Index is perhaps the most popular of the many price indices calculated by the federal government. It is used to determine Social Security benefits, Cost of Living Adjustments, and the amount of certain taxes that are paid. The Federal Reserve Bank of Cleveland has a neat educational tool known as the
"drawing board" on their website. Watch the following video (Click on post title to go to video) and in your post you must do two things.

1) Come up with a legitimate higher order thinking question over material covered in the video.

2) Provide an answer to someone else's question that they posted. (In your answer be sure to list whose question it is you are answering.)
3) Once someone's question is answered it is no longer usable by anyone else.

My Question #1"How is the Economy like Goldilocks?

It's a Small World After All

Here is a great quote about the interrelatedness of the global economy, and it comes not from a famous economist but from someone you all know. 

"Did you ever stop to think that you can’t leave for your job in the morning without being dependent on most of the world? You get up in the morning and go to the bathroom and reach over for the sponge, and that’s handed to you by a Pacific islander. You reach for a bar of soap, and that’s given to you at the hands of a Frenchman. And then you go into the kitchen to drink your coffee for the morning, and that’s poured into your cup by a South American. And maybe you want tea: that’s poured into your cup by a Chinese. Or maybe you’re desirous of having cocoa for breakfast, and that’s poured into your cup by a West African. And then you reach over for your toast, and that’s given to you at the hands of an English-speaking farmer, not to mention the baker. And before you finish eating breakfast in the morning, you’ve depended on more than half the world. This is the way our universe is structured, this is its interrelated quality." Martin Luther King, 1967 

Your assignment this week is to find 5 items that you use in your everyday lives and determine where they are produced. Look on the bottom for the "Made in ..." stamp. 
List the items and the country where they are made. Be creative. You'll be surprised at the journey that some of these common items have made to get into your hands.

The American Worker

In honor of Labor Day, click on the title link and read this article about the American worker and leave your comments. "American workers stay longer in the office, at the factory or on the farm than their counterparts in Europe and most other rich nations, and they produce more per person over the year." Is the price of being the worlds number one economy too high. Your comment needs to be a minumum of 50 words.

Best Blogs for Economics Students

Click on Post title to be taken to list website

Review two blogs from this list of the 100 best blogs for economics students. Make sure they are from different categories, and don't repeat one that someone else has already done. Yes I realize that this means you will have to check the previous posts to see which ones have already been reviewed. The sooner you do this one the easier it will be. Reviews need to include:
1) Content
2) Appearance
3) Ease of Navigation
4) Apparent bias

Once the best ones are taken click here for secondary list

**Due Sunday before midnight**

Blog Quiz due Friday August 28

This assignment is due Friday August 28, 2015. Click on the Reffonomics link on the right side of this page. Click on Basic Concepts. Page through the four power point presentations in the Introduction to Economics Unit. 2004 - 2009 2nd ed, "What is Economics", "Opportunity Cost", " Resources", and "Fallacies". Click on the first "Multiple Choice Questions" link. Fill in your first and last name and take the 10 question quiz. You will then print out your results and turn them in to me on Friday at the beginning of class.

Greetings Future Economists

Greetings Class of 2016!
Your first task is to show me that you are able to find this site and leave a comment. So tell me one topic that you think that we will study this year. Be sure to leave your name and class period at the bottom of your post. You may not copy anyone else's post, so posting earlier is better.