Under 21? Getting a credit card just got tougher

In the past, everyone on campus was trying to give you a credit card. It looks like that is about to change. Is this a good idea or not?

Economics!

A College professor came up with this acronym for remembering the basics of Economics. Pick a letter and expand on it based on what you have learned about Economics so far.

Ten Key Principles in Economics

Everything has a cost. There is no free lunch. There is always a trade-off.

Cost is what you give up to get something. In particular, opportunity cost is cost of the tradeoff.

One More. Rational people make decisions on the basis of the cost of one more unit (of consumption, of investment, of labor hour, etc.).

iNcentives work. People respond to incentives.

Open for trade. Trade can make all parties better off.

Markets Rock! Usually, markets are the best way to allocate scarce resources between producers and consumers.

Intervention in free markets is sometimes needed. (But watch out for the law of unintended effects!)

Concentrate on productivity. A country’s standard of living depends on how productive its economy is.

Sloshing in money leads to higher prices. Inflation is caused by excessive money supply.

!! Caution: In the short run, falling prices may lead to unemployment, and rising employment may lead to inflation.

An Economic Mystery

Alright, AP students… you are economics detectives and you’ve been assigned your first case. The mystery is thus: how can decreasing demand cause prices to go up? In chapter three, we are reading about product markets, the interaction of supply and demand, and market equilibrium price and quantity. You’ve read that prices are affected by the interaction of supply and demand. Clearly, if demand for a product rises, prices should go up unless supply increases a certain amount. On the other hand, if demand falls, then prices should fall unless supply falls at the same time.
So what’s happening in the article above? The headlines seems to proclaim an economic impossibility is occurring: as demand falls, prices rise! How is this possible? Is it? Is the market for apartments in the D.C. area defying the laws of demand and supply? Read the article and see if you can solve this economic mystery!

Day Zero in Haiti

Read this interesting article about the recent earthquake in Haiti and the chance that exists for this country to remake itself. In your comments address at least two of the discussion questions at the end of the article.

Assignment #1

This assignment is due Friday, January 15, 2010. 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.

Welcome Spring Semester Econ Students

Welcome Class of 2010. The wonderful world of Economics is waiting for you.

The decline of music piracy holds lessons for other industries

Check out this article on the decline of music piracy. When napster first came out it was all the rage. Now there seem to be other legal alternatives to illegal file sharing of music. In your opinion are more people turning to legal means, or is illegal downloading of music still commonplace?

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.

Who Won the Recession? McDonalds.

Check out this interesting article about how McDonald's sales actually increased during the recession. How can this be? Aren't we all about eating healthy? Didn't we all watch "Supersize Me"? Feel free to share your own McDonald's experiences. Are you a closet "Big Mac junkie"?Can you think of any other businesses that did well as consumers stopped spending?

Allocating H1N1 Vaccines

Greg Mankiw is one of the most highly respected Economists in the U.S. He is currently a professor of Introductory Economics at Harvard. Check out this discussion question that he plans to use in his classes. Feel free to go beyond his two alternatives and be creative with your ideas.

The Government Spending Multiplier

Here is an article dealing with exactly what we are studying this week, fiscal policy and the Keynesian Multiplier. Read the article and respond to the four discussion questions at the end of it.

World Clock

This is a repeat of an older post, but I still love this site. Check out the world clock. Do you see any trends? Any of the numbers surprise you? Check out some of the other features on the site.

Economics: The 180 Degree Science

Read Steve Latter's article about how studying Economics just may cause you to re-examine some long held beliefs about the world. In your comments be sure to answer two of the four discussion questions found at the end of the article. Enjoy your Labor Day Holiday. Three cheers for the American worker, the most productive being the world has ever know.

The National Debt

Follow this link to view the 30 minute film entitled "I.O.U.S.A." The filmmaker is obviously not a big fan of George W. Bush. However, with that he mind, he still does an excellent job of educating us about the size and problems of the national debt. Leave your thoughts after watching the video in the comments section of this blog. Each comment must be a minimum of fifty words, make sure to leave your name and class period at the end of the comment. What are the lasting impressions that this video left on you?

Assignment #1

Follow link to Reffonomics.com, click on Macroeconomics Textbook. Click on "Basic Concepts" in the left hand column. Read all parts of first section "What is Economics?" Take online "What is Economics" multiple choice Quiz. Print off score sheet after quiz and turn in at the beginning of class Thursday August 27.

Welcome!

Welcome Class of 2010. The wonderful world of Economics is waiting for you.

Monkey Business

For this our final blog of 2008-09, I've decided to resurrect an oldie but a goodie.
As you all know, I am no big fan of monkeys. However, this is a pretty interesting article on the research being done by a Yale economist testing the economic behavior of a group of Capuchin monkeys.
What do you think of his research?

A Sin Tax on Video Games

OK, one of you recently told me that all of my current events and news stories were negative and that I was depressing all of you every day in class. Here is a lighter side story. A sin tax is a tax on negative behavior such as taxes on cigarettes or alcohol. A Louisiana lawmaker has decided that all of this video gaming and TV watching has got to stop. It's not just Louisiana either, lawmakers in New Mexico, Texas, and Wisconsin have tried to get similar legislation passed. What are your thoughts on this? Are the youth of America spending too much time in front of their Xboxes and Wiis? Will this legislation alter their behavior?

Making Sense of the Banking Crisis

This is, perhaps, the most engaging and accessible explanation of the current "Great Recession" I have come across. In this 59-minute podcast, Ira Glass and his cohorts at Chicago Public Radio and NPR create an ultra-simplified world of just one eager dollhouse buyer, a would-be banker with $10 in his pocket, and a young man with $90 he wants to put into a savings account to explain the financial mess we find ourselves in. This recording explains why TARP is called TARP, what insolvency is all about, what the term toxic assets means, and why America's biggest banks are afraid to "mark it to market" or re-value those toxic assets.

After listening I have a better appreciation for the state of all things financial but I am left wondering, what's the best way out of this morass?

Discussion Questions

1. Can you point to an underlying cause that precipitated this crisis?

2. Does the government nationalize the banks for a time, robbing banks' shareholders of their investments but allowing banks to start over with a clean slate? Does it help the banks get back on their feet by purchasing toxic assets with taxpayer money at artificially high prices? What are the short and long term effects of these different strategies?

3. Do you think the United States has "learned its lesson"? Will people (and businesses and governments) change their behavior? Or are we doomed to repeat this process?

4. Are there safeguards the government can introduce that will keep this from happening in the future?

Buy American

It seems obvious that the idea of "buying American" is a good thing. Shouldn't we try to buy American made goods, especially during this period of recession and economic downturn? It could almost be seen as our patriotic duty to purchase American made goods. We would be saving American jobs, wouldn't we? Well what seems obvious is not always the economic truth. Read this blog post by Steve Latter. He makes some very good points about free trade, and the evils of protectionism.