Beyond the Sound Bites:
Religion and Economics
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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.
The electronic edition of the Philadelphia Inquirer is available. We have the Sunday edition, available on Mondays, in addition to the Tuesday through Friday editions on the other days.
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Unit 4 Macroeconomics: Performance and Stabilization
Using Econometric Models
Why are short-term econometric models more accurate than long-term models?
In-class assignment, with a partner, answer the question.
Use the graphic organizer to identify the causes and effects of the Great Depression.
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.
UNDERSTANDING ECONOMICS: INFLATION, 6:32
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.
Danse Macabre - Low Strings Finale (Theme)
Home Base Grove
by Kevin MacLeod
consumer price index (CPI)
Complete the graphic organizer by illustrating the steps in a wage-price spiral.
How is a market basket used to measure the price level?
Which explanation do you think gives the most reasonable cause of inflation? Why?
Why is inflation especially hard on people with fixed incomes?
Use a graphic organizer to identify the steps in measuring inflation.
Profiles in Economics
p. 368, #1, How did Friedman disagree with other economists about achieving economic stability?
#2, How do you think the quality of education would be affected if free market principles were applied to schools?
Milton Friedman - Socialism is Force, 6:39
Why did socialism fail in the Soviet Union?
What values does socialism have?
In contrast, what values does capitalism possess?
What happens when you try to do good with other people's money?
When is the most harm done?
Who was worst between Lenin, Mussolini, and Hitler? Why?
Milton Friedman discusses the moral values encouraged by economic systems and explains that a primary difference between capitalism and socialism is the difference between free choice and compulsory force.
Section 3 Unemployment
civilian labor force
Complete a graphic organizer by describing the different sources of unemployment.
How do we calculate the monthly unemployment rate
Which categories of unemployment do you think are the most troublesome for the U.S. economy? Why?
What makes the GDP gap a type of opportunity cost?
Use a graphic organizer to identify the people who are considered unemployed and those excluded from the civilian labor force.
Student Web Activity
13.1 Business Cycles
13.2 Index of Leading Economic Indicators
13.7 Measuring Consumer Discomfort
Ch. 13 Multiple-choice Quiz
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.
"The Girl from Ipanema" ("Garota de Ipanema") is a well-known bossa nova song, a worldwide hit in the mid-1960s that won a Grammy for Record of the Year in 1965. It was written in 1962, with music by Antonio Carlos Jobim and Portuguese lyrics by Vinicius de Moraes. English lyrics were written later by Norman Gimbel.
The first commercial recording was in 1962, by Pery Ribeiro. The version performed by Astrud Gilberto, along with João Gilberto and Stan Getz, from the 1964 album Getz/Gilberto, became an international hit, reaching number five in the United States pop chart, number 29 in the United Kingdom, and charting highly throughout the world. Numerous recordings have been used in films, sometimes as an elevator music cliché (for example, near the end of The Blues Brothers). In 2004, it was one of 50 recordings chosen that year by the Library of Congress to be added to the National Recording Registry.
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1. p. 348, #23-25.
1. p. 348, #26-28.