G. Mick Smith, PhD: Honors Business Economics: 23 May 2011

Sunday, May 22, 2011

Honors Business Economics: 23 May 2011

Prayer
Beyond the Sound Bites (if time after 13.1 Quiz):

Clear your desk except for a pencil. Once everyone is quiet, and no talking during the Quiz, we can begin. Be sure to put your name on the Quiz and the Scantron. You may write on both the Quiz and the Scantron.

If you finish early, you may take out non-class materials; once everyone is finished, put away the non-class materials. Then, I will collect the Scantron first, and then I will collect the Quiz.

Be sure your name is on both the Scantron and the Quiz.

If your name is not on the Quiz it will not be returned.

Religion and Economics

The Chapter 12 Section 3 Quiz Make-up is today.

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The Chapter 12 Section 1 Quiz Make-up is today.

The Chapter 11 Test Make-up is today.

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The Chapter 10 Test Make-up is today.

Skip #31; leave it blank.

The Chapter 10 Section 3 Quiz Make-up is today.

The Chapter 10 Section 2 Quiz Make-up is today.

The Chapter 10 Section 1 Quiz Make-up is today.

The Chapter 9 Test Make-up is today.

The Quiz 9.(4) Prep Page is available.

For the Make-up Quiz, consider the material found in Chapter 9 Section 3:

minimum tax, VAT (Value-Added Tax), flat tax, federal tax reform, business taxes, profits, tax burden, personal income rate, depreciation, investment tax credit, and, capital gains.

Cf. http://shanawiki.wikispaces.com/Honors+Business+Economics+Chapter+9+Section+4+Quiz+Prep+Page+Spring+2011

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Unit 4 Macroeconomics: Performance and Stabilization

Chapter 13

leading economic indicator

composite index of leading economic indicators

econometric model

In-class assignment, with a partner, answer the question.

13.1 Reading Strategy

Complete the graphic organizer by identifying factors that can cause changes in the business cycle.

Issues in the News

Economic Growth Totters

Business Cycles: Characteristics and Causes

In-class assignment, with a partner, answer the following.

When does a cycle begin and end?
What are the phases?
If the economy continues to expand; what is this called?

13.1 Business Cycles

http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p354.swf

Phases of the Business Cycle

Changes in Investment Spending

Innovation and Imitation

Monetary Policy Decisions

External Shocks

In-class

Reading Check

Summarizing

What are thought to be the cause of business cycles?

Business Cycles in the United States

The Great Depression

Causes of the Great Depression

Recovery and Legislation

Cycles After World War II

In-class

Inferring

What impact did the Great Depression have on the United States?

In-class

13.2 Index of Leading Economic Indicators

http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p358.swf

What can the Index show?
What can it predict?
On average, how many months before a recession begins does the Index indicate it?
How many months before a recovery begins does the Index reveal this?

Forecasting Business Cycles

Using Everyday Economic Statistics

Using Econometric Models

In-class

Reading Check

Analyzing

Why are short-term econometric models more accurate than long-term models?

13.1 Review

In-class assignment, with a partner, answer the question.

Use the graphic organizer to identify the causes and effects of the Great Depression.

Business Week

News clip

Dog Days: A Frank Look at the Economy

Section 2: Inflation

Inflation is the increase in the general level of prices of goods and services. Several price indexes are used to measure inflation. Consumer price index (CPI) is a statistical series that tracks monthly changes in the prices paid by urban consumers for a representative "basket" of goods and services. Another index is the producer price index (PPI), which is a monthly series that reports prices received by domestic producers. Causes of inflation include strong demand, rising costs, and wage-price spirals, along with a growing supply of money. Therefore, inflation can reduce purchasing power, distort spending, and affect the distribution of income.

inflation

UNDERSTANDING ECONOMICS: INFLATION, 6:32

In-class

What is inflation?
What is the most effective tool used to gauge the level of inflation?
What are the two types of inflation?
How is each defined?
How does the government attempt to combat inflation?
Define the attempts.
What is deflation?
What is stagflation?
What is hyperinflation?

Text from vid:
Inflation is defined as an overall increase in the price level. Or, in other words, an overall decrease in the purchasing power of the dollar.
When inflation occurs, currency buys fewer goods and services.

The most effective tool used to gauge the level of inflation is the Consumer Price Index, or CPI.
The Consumer Price Index is a basket of about 400 commonly purchased goods and services that is used to represent overall consumption.
Each month, the Department of Labor checks the prices of these 400 different items in 85 areas all over the U.S.
Inflation exists when the average cost of the items is rising. If the average cost of these items remains the same, there is no inflation, even though most likely the prices went up on some of the items, while the prices went down on others.
The overall percentage of increase or decrease of cost for these items from year to year is the annual inflation rate.
Well cover the Consumer Price Index in greater detail in a later video.

There are two types of inflation: demand-pull inflation and cost-push inflation.
Demand-pull inflation occurs when the demand for goods and services increases faster than the supply of goods and services. This increase in demand could come from increases in the money supply, or increases in the amount of money government spends.
Demand-pull inflation is sometimes described as too much money chasing too few goods.
When demand increases, there would be a shortage of many items if prices stayed at the same level. However, prices will not stay at the same level.
When theres a shortage of something, the price on that item will rise until it hits an equilibrium. This causes a rise in the overall average of prices.

Cost-push inflation happens when there is an increase in the cost to produce goods and services. These increased production costs could be increases in the cost of raw materials, energy, or any other item used in production.
There also could be increases in wages. This is sometimes referred to as wage-push inflation, or the price-wage spiral.

The government attempts to combat inflation using fiscal policy and monetary policy.
Fiscal policy is the use of the governments taxing and spending powers to attempt to accomplish economic pulls. Fiscal policy can be used to decrease spending to reduce demand-pull inflation.
Government can reduce total spending by reducing its own spending. It could also reduce overall spending by raising taxes, which leaves consumers with less money to spend on goods and services.

Monetary policy involves the changing of interest rates and availability of loans to attempt to accomplish economic goals.
The Fed can reduce spending by raising interest rates and making loans harder to obtain, which in turn reduces demand-pull inflation.

Inflation can never be totally eliminated. Furthermore, efforts to reduce inflation tends to cause unemployment, just like efforts to reduce unemployment tends to cause inflation.
Because of this tradeoff, policymakers have to struggle with which is worse when making policy decisions.
Should they attempt to reduce inflation at the cost of higher unemployment? Should they attempt to reduce unemployment at the cost of higher inflation?
These questions are the subject of much debate among economists. And while these policies might work good in theory, its safe to argue that theyre not as effective as one might hope.

There are some other terms worth mentioning briefly. The first is deflation.
Deflation is defined as the general drop in the price level. Or, to put it another way, an increase in the purchasing power of the dollar.
Deflation occurs during recessions when the GDP is declining.
Because of the decline in demand, sellers must reduce their prices to attract buyers, which causes an overall price decrease, also known as deflation.

Music:
Danse Macabre - Low Strings Finale (Theme)
Witch Hunt
Dangerous
Crisis
Gustav Sting
Home Base Grove
by Kevin MacLeod
incompetech.com

deflation

price index

consumer price index (CPI)

market basket

base year

In-class

Reading Strategy

Complete the graphic organizer by illustrating the steps in a wage-price spiral.

In-class

Reading Check

Analyzing

How is a market basket used to measure the price level?

In-class

Reading Check

Explaining

Which explanation do you think gives the most reasonable cause of inflation? Why?

In-class

Reading Check

Identifying

Why is inflation especially hard on people with fixed incomes?

In-class

Review

Use a graphic organizer to identify the steps in measuring inflation.

Profiles in Economics

Milton Friedman

Resources

Overviews

http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit4/chapter13/chapter_overviews.html

Student Web Activity

http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit4/chapter13/student_web_activities.html

In Motion

13.1 Business Cycles

http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p354.swf

13.2 Index of Leading Economic Indicators

http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p358.swf

13.7 Measuring Consumer Discomfort

http://glencoe.com/sites/common_assets/socialstudies/in_motion_08/epp/EPP_p374.swf

Crossword Puzzle

http://www.glencoe.com/sec/socialstudies/tutor/economics/econprinciples2005/puzzles/epp2005_13.html

Flashcards

http://www.glencoe.com/qe/efcsec.php?qi=15463

Ch. 13 Multiple-choice Quiz

http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit4/chapter13/self-check_quizzes.html

Wisconsin Labor Protests - Noodles, 1:36

Homemaking Knowledge Contributes To The Enrichment of Life, 9:19

From the "Why Study Home Economics?" (1955); Two teenage girls learn how a knowledge of homemaking can contribute to the enrichment of life. They also learn about the vocational opportunities available to home economic students. Home economics, is an academic discipline which combines aspects of consumer science, nutrition, cooking, parenting and human development, interior decoration, textiles, family economics, housing, apparel design and resource management as well as other related subjects. Producer: Centron Corporation; Creative Commons license: Public Domain.

Slo-mo Jello 1:00

Over Population Nightmare from 1960s - Star Trek's Mark of Gideon, 2:47

Sing along to Abattabad, :54

PaperPhone, 1:39

PaperPhone is the world's first nextgen, thin film smartphone and interactive paper computer. It is based on a 3.7" flexible electrophoretic (E Ink) display that does not consume electricity when it is not refreshed. Thinfilm sensors allow the phone to respond to bending of the screen to navigate pages in ebooks, play or pause mp3s, make phone calls, or navigate apps. A flexible wacom tablet allows users to draw on the screen with a pen as if it were a sheet of paper.
For more information visit http://www.hml.queensu.ca/paperphone

http://glencoe.mcgraw-hill.com/sites/0078747643/student_view0/unit3/chapter11/self-check_quizzes.html

Business Cycle Rap (Teach Me How To Dougie Parody), 4:47

Economics Theorist Project by: Or S. & Nadya P
Schumpeter - Business Cycle
"Teach Me 'Bout The Cycle"

Lyrics:

*Anthem of former Austria-Hungary

Aye! Aye!
They ask me, Schumps (what?)
Can you teach me 'bout the cycle?
You know why?
It's what the economy goes by
All I need are his theories and some simple math.
So you, you, and you will learn 'bout this in ropo's class
First stage, off the page, its the business start-up
They gonna be all over it when they hear about that cycle right?
Invest resources like land labor capital
New ideas are important to succeed
establish a position in the market, its what they need
creating a rep(utation) among the investors and consumers
first step has high risks to end up like a loser
marked by lower profit margins
is the price paid by entrepreneurs

[Refrain]
Teach me 'bout the cycle
T-Teach me 'bout the cycle
Never change the cycle
Never Never change the cycle
E'erbody know it, E'erbody know it (T-E-P-R)
You ain't messin' with the cycle (T-E-P-R)

The T is for trough
The E is for expansion
The P is for peak
The R is for recession
E'erbody know it, E'erbody know it (T-E-P-R)
You ain't messin' with the cycle (T-E-P-R)

The name is Schums
For thoses that don't know him
This stage has economic growth and money
A rise in consumer demand isn't funny
They've built a core of loyalty and trust
A group of consumers come back as a must.

Keep up with rising sales and further expansion
They have to increase what's essential.
Manufacturing n' production, these inputs are substantial.
Once upgraded and aided, its part of the plan
Their profit margins continue to rise, 'cause they know they can
Gaining status and approval, they establish their niche
Ads and commercials, can't keep 'em on a leash.
[
As a brand name in the market,
they put money in their pocket.
It's all positives here as they continue to cheer...

Refrain

The third stage, they're at a certain age
When the business matures.
They've fixed every fault and filled every hole
Now they travel through the market on cruise-control

The sales reached a regular amount
Less resources employed on their account
No retirement required, they are not disabled
Stuff profit in the pocket, the margin's still stable.

Venture out, attempt product innovation
It's their call, they're in charge of navigation
Nothing's off limits, the options swirled
Cause they're happy where they are,
On top of the world

Refrain

The final stage is the toughest of all
Favourable conditions are hard to stall
When economic activity is reduced by a lot
The decline in buying and selling cannot be fought
Since employment / also circles the drain
Followed by production and most domaine(s)
None of which / they'll be able to sustain.

They struggle in the market, trying to self discover
Hoping that they will quickly recover

Refrain

Don't focus on the trees, look at the forest
(E'erbody know it, T-E-P-R)
Don't focus on the trees, look at the forest
(You ain't messin' with the cycle)

That's all you need to know 'bout circular flow; Peace.