Econ and AP Macro Retest: Quiz III open

Econ: Chapters 5-6 Supply and Demand Quiz III – close Monday 4/7

AP Macro: Chapter 11 Fiscal Policy Quiz III – close Monday 4/7

Econ and AP Macro Retest: Quiz II closing

Econ: Chapters 5-6 Supply and Demand Quiz II – close Monday 3/31

AP Macro: Chapter 11 Fiscal Policy Quiz II – close Monday 3/31

AP Macro: International Trade

     Why do nations trade? The easy answer is that nations possess different natural resources and build their industries based on their available resources. Nations develop land-intensive, labor-intensive, or capital-intensive industries—or a combination of such industries—based on their best available resources. They then trade for those products they cannot profitably produce themselves. The benefits of international trade include a wider variety of products, greater output, greater efficiency in production, and a higher standard of living. The increased competition with foreign firms helps to deter monopolies and holds prices down in the marketplace. International connections help to promote peaceful solutions to political problems, rather than war.

AP Macro Homework:
1. Read Chapter 5.1-5.2  pp.85-89

Econ: Gross Domestic Product

     Measuring national output deals with the economy using aggregate measures of output, income, prices, and employment. Gross Domestic Product (GDP) is the nation’s most comprehensive measure of total output. Economists view the economy as being organized into four sectors: the consumer or household sector, the investment sector, the government sector, and the foreign trade sector. These sectors are then combined to form the output-expenditure model, which is written as GDP =  C + I + G + X. The GDP measures the total dollar value of all final goods and services produced over a specific time period. GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a country’s standard of living. There are two ways of measuring GDP, the expenditure approach and the income approach. The expenditure approach is to add up the market value of all domestic expenditures made on final goods and services in a single year. Final goods and services are goods and services that have been purchased for final use or goods and services that will not be resold or used in production within the year. Intermediate goods and services, which are used in the production of final goods and services, are not included in the expenditure approach to GDP because expenditures on intermediate goods and services are included in the market value of expenditures made on final goods and services. Including expenditures on both intermediate and final goods and services would lead to double counting and an exaggeration of the true market value of GDP. 

Economics Homework:
1. Read Chapter 13.2 pp.252-256

Econ and AP Macro

Economics & AP Macro classes: Reminder to bring your textbook to class.

Economics: graphic equations completed

AP Macro: caught up with reading chapters

Spring Break Is Almost Over

Econ and AP Macro Retest: Quiz II

Econ: Chapters 5-6 Supply and Demand Quiz II – close Monday 3/31

AP Macro: Chapter 11 Fiscal Policy Quiz II – close Monday 3/31

Econ: Business Plan Presentation

     Businesses will compete with all other businesses in their industry for investor funding. Those businesses not presenting are to conduct themselves in a professional and businesslike manner.

• Each investor has a total of $5 million to invest in as many new businesses as he or she would like.
• The goal is to get the highest monetary return on the investment by choosing businesses that are likely to be successful.
• Investors may distribute their $5 million in any way they think will help them reach this goal.

AP Macro: Macroeconomic Policy

     Mainstream economists argue that the economy does not easily self-adjust, disputing the RET new classical notion that prices and wages are easily flexible downward. Instead, mainstream economists argue that wages are “sticky” because of labor contracts and the minimum wage. Even if wages could freely fall, the reduction in worker effort and morale, increased supervision costs, and increased worker turnover would overwhelm any reductions in costs resulting from the lower wages. Such “sticky” wages make it difficult for the economy to adjust to downturns, resulting in high unemployment and requiring months or years to reach full-employment output again in the absence of fiscal or monetary policy.

At one time, monetarists and other new classical economists argued that the government should adhere to a monetary rule, requiring that the money supply only be increased at the rate of the average increase in production capacity, regardless of the state of the economy. They wanted to ensure enough money was available for purchasing the increased output, but they did not want the Fed to attempt to stabilize the economy, believing it created even more stability. In recent years, these economists have instead called for “inflation targeting,” urging the Fed to use its monetary policy tools to keep the inflation rate within a specific range. They also promote a balanced federal budget and argue against the use of fiscal policy, claiming that increased borrowing for expansionary policy only crowds out private investment, reducing the effectiveness of the fiscal policy and harming long-run economic growth.

Mainstream economists, however, argue that discretionary fiscal and monetary policy hold an important role in achieving short-run economic stability and long-run economic growth. They note that the equation of exchange breaks down in the short run, because the velocity is in fact variable and unpredictable—violating one of the primary assumptions of monetarist theory. Further, mainstream economists can point to specific historical examples where monetary policy effectively addressed economic instability, refuting the contention that it only causes greater instability. Economists also support the use of fiscal policy, noting that crowding out (if it occurs at all) is very unlikely during recessions, when investment is already quite low. Further, any requirement that government balance its budget is, in fact, pro-cyclical. At a time when consumer and investment sector spending is declining, reducing government revenues, the government would also be forced to reduce spending, exacerbating the recessionary spiral.

AP Macro Homework:
1. Read Chapter 17.3-17.5 pp.326-334

Econ: Starting a Business

     Students will take on the role of entrepreneurs who are going to start a business in one of two industries: recycling or computer and video games.

Step 1: Examine the information about your industry.
Record five important and interesting facts about the industry.

Step 2: Brainstorm three or more problems or needs that exist in your industry.
With these problems or needs in mind, think about and discuss these questions.
• How might you use a current or a new technology in a different way?
• How might you improve the way a good is made or a service is delivered? For example, you might use different materials or work more efficiently.
• How might you identify a new customer market or better satisfy a current market?
• How might you respond to key trends or issues in this industry?

Step 3: Choose one of the following options, or create one of your own.
Then record your initial business idea.
• Develop a new good.
• Provide a new service.
• Improve or adapt an existing good.
• Improve or adapt an existing service.
• Satisfy a new customer market.

They will have the choice to work alone as a sole proprietorship or with others as a partnership or corporation. Each business will design a presentation that summarizes the main details of their business plan. Each business will deliver its business plan presentation to a group of investors to compete for financial funding against others in the industry.