ECO100 All Discussions Latest 2017 December

Week 1 | Discussion

"Gregory Mankiw's 10 Principles"

This week, we jump right in and talk about markets. You probably have a sense of what a market is, but what about economics? Watch this short video that highlights the Ten Principles, which are the core of economics.

Watch this video on Mankiw's 10 Principles

What is (are) one (or two) principle(s) or topic(s) about economics that you want to learn more about and why?

"Economic Profit vs. Accounting Profit"

In this video, Sal from Khan Academy explains how the economic concept of cost is different from accounting cost and why the difference is important to understanding what we mean by profit. In economics, we build opportunity cost — including 'implicit costs' — right into the supply curve.

After you view the video, think of the business you are currently in, or even dream about the business you would like to start. Identify/discuss the fixed costs, variable costs, and the implicit costs in that business.

"Perfect Competition"

Firms like Walmart, Target, and Kmart are often given as examples of competitors. Ironically, these firms are not what an economist would define as perfectly competitive firms.

• Why are these firms not perfectly competitive?
• What are the conditions that create perfect competition?
• Name or describe an example of a perfectly competitive good or firm.

"Owning the Market"

In the lesson on oligopolies and monopolistic competition (The Whole Spectrum of the Market), Sal from Khan Academy creates a two-dimensional grid of the market types based on the number of competitors and the degree of product differentiation.

• Identify one monopoly from which you buy a good or service.
• Identify one oligopoly from which you buy a good or service.
• Identify one monopolistic competitor that you buy a good or service from.
• Share one effect you think these types of firms have on the quality of goods or services that you purchase. Is the quality affected positively or negatively? Provide a rationale for your answer.

"GDP"

Your friend at work says the U.S. economy is not doing well: "We are just not a strong economy anymore." You are not entirely convinced by her argument, so you do some research. Here is what you find:

• There are three major powers in the world economy according to total GDP: China at $21.3 trillion; the EU at $19.2 trillion; and the United States at $18.6 trillion (all in real 2016 dollars). Maybe your friend is right?
• Then you look at per capita GDP and it does not seem to tell the same story: China per capita GDP is $15,400; EU per capita GDP is $37,800; and U.S. per capita GDP is $57,300. Maybe your friend is wrong?

Perhaps we really need to understand what GDP measures and what it does not measure.

Using the above facts, make the case that the United States is still economically strong.

• What does GDP measure and what does that tell us about our country’s economic strength?
• Do you feel that GDP is valuable in understanding our country’s economic strength? Explain why or why not.
• Do you believe that there is a better measure of a country’s economic strength that we should also use (in addition to GDP)? Explain your answer. If you don’t think there is, explain why.

"Inflation"

In the past, the single largest asset a person or family owned was their home. However, since the Great Recession and the bursting of the housing bubble in 2007, many families consider owning a home a

Test out the impact of inflation on an asset like a home.

• Click on "Try the Inflation Calculator."
• • Enter the year you bought your home. If you have not purchased a home, enter a random year.
  • Assume that you paid $100,000 for it.

How much has the value of the home changed based on the CPI calculator?

Why does inflation encourage businesses and households to hold physical assets like homes, buildings, and equipment?

"Aggregate Demand and Supply"

In 1973, there was an oil supply shock created by OPEC (the Organization of the Petroleum Exporting Countries). Your textbook describes the supply shock as a source of the recession which lasted from 1973-1975.

Now the price of oil is dropping. Let's look at what happens when the supply shock is favorable.

Use aggregate demand and aggregate supply to explain why current oil prices are so low. It is certainly good for consumers, but is there a downside as well?

When oil prices drop, who benefits and who loses? Why? How?

Week 9 | Discussion

"Fiscal Policy"

Read CNBC's Consumer confidence strengthens in July, beating expectations for a drop

Who is in charge of making fiscal policy?

What fiscal policy measure has a direct impact to the economy?

If consumer confidence is low, which of the following will be the most effective fiscal policy?

An increase in government spending, or

An equal decrease in taxes?

Explain your reasoning.

Consumer confidence index for July beats forecasts from CNBC.

"The Federal Reserve and Monetary Policy"

Visit the Federal Reserve website and answer the following questions in your own words.

Part 1:

• What is the mission and legal mandate of the Federal Reserve System?
• What policy tools are available to the Fed to achieve its mission?
• What is the difference between an insolvent bank and an illiquid bank?
  • Why/how does the Fed treat banks that are insolvent differently from illiquid banks?

Part 2:

The Fed has only increased the interest or discount rate twice since the 2007/08 recession. Will it push the rates up a bit more? We don't know! We can find out what those at the Fed are thinking by checking out posted information each month by the FOMC (Federal Open Market Committee).

• According to the Fed, what are its inflation and full-employment targets?
• Explain how changes in the money supply will raise interest rates and how the anticipated increase in interest rates will likely affect GDP and employment.

"Course Completion"

In the interview you watched in Week 1 with Bill Gates, he argues that economics is an agent of change that will impact every career. Based on your study of economics, do you agree that knowing more about economics will help in your career?