Surrounded By Economics

And Here is teh Entree....

2008-01-18T16:48:00.000-08:00

It is a big deal with the national government begins to solve a problem the economy faces. Pres. Bush's father lost his election because he failed to recognize the looming economic crisis...clearly Bush II has learn an important lesson...

http://www.cnn.com/2008/POLITICS/01/18/bush.economy/index.html

BTW...I went to the grocery store to buy stuff for salad and dessert for a family dinner tonight. While I was there I picked up some spices to bring home...not to many and a bottle of wine to go with our BBQ (asado :). $79.00 later...I am still in shock and glad I never go the grocery store in the states! I will complain just a little less about the prices when I get back to Buenos Aires.

Can't wait to see you all (not really, I was just saying that to be nice :) Enjoy the last two weeks!

Would You Care for an Appetizer?

2007-12-07T07:50:00.000-08:00

Thank Emilie for this little snack of economics news! As we near the end of microeconomics and begin to look forward to macroeconomics next sememter I think this article Emilie brought in is the perfect warm up for so much of what we will cover next semester. And though no one wants to see the economy take a nose dive, I am sure we will see that we have a lot to talk about and watch next semester as we begin to explore of the important macroeconomics issues.

When you read this article think about what you see as the single most important piece of information. Why do you see this as being so significant?

http://www.nytimes.com/2007/11/25/weekinreview/25goodman.html?_r=1&oref=slogin

Thanks for a great semester and never fear...I may just blog over the break! I really do think you should make my blog your homepage :) Hopefully I will come back from vacation with some rich insights on Asian economies! Have a wonderful vacation and see you in February.

Black Friday Arrives

2007-11-23T07:56:00.000-08:00

And what does it all mean...

http://www.nytimes.com/2007/11/23/business/shopWEB.html?_r=1&hp&oref=slogin

Happy day after Turkey Day...so far I have yet to see a whale...huge windstorm here and I may never see the whales :(

Can Turkeys Predict the Economic Future?

2007-11-20T15:05:00.000-08:00

As we near Turkey Day...I thought it only fitting to do a Turkey Day blog. I don't know if you have been paying attention to the predictions about the US economy lately, the Fed has predicted we will see a downturn in 2008. But I thought perhaps the proof is in the Turkey dinner...

http://www.cnn.com/video/#/video/us/2007/11/20/hunter.turkey.day.costs.cnn

This should get us started thinking and talking about macroeconomics...because after Turkey Day...it just might be all doom and gloom.

Have a great vacation! Gobble, Gobble!

BTW, extra-credit for whoever finds the video of Pres. Bush pardoning a turkey, just another quaint/bizarre? tradition we have for Thanksgiving. This year there were two lucky birds...one named May the other...Flower!

Ooohhhh....Collusion in Baseball???

2007-11-15T12:23:00.000-08:00

Given how much Alex Rodriguez wants to play baseball for the next 10 years...it may not be a bad idea! I say collude away :)

http://www.time.com/time/nation/article/0,8599,1683340,00.html

How in the world can we justify paying people this kind of money? Ooohhh...think factor markets as well!

Why We Sometimes Call it the Dismal Science

2007-11-07T06:30:00.001-08:00

Sadly, this too relates to economics.

http://www.cnn.com/video/#/video/world/2007/11/05/riminton.philippines.kidney.sale.cnn

Why Do Teachers Get Paid So Little?

2007-11-06T05:49:00.000-08:00

As we wrap up our unit on the Theory of the Firm and we begin to leave perfect competition and monopoly in the dust, we get to turn our attention to the other side of the economic equation...rather than business, we now will start to look at the consumer side of the coin. Rather than looking at what we want to buy, we will need to look at how much do we need to make to buy all that stuff we have managed to convince ourselves we cannot live without!

As a teacher, I knew when I decided to follow this career path I would most likely never get rich. You do not go into education for the money. But on the other hand, I have bills to pay, a cat to feed :), and wants and needs that I too want to satisify. Given the fact that teachers are skilled professionals, that education is a major building block of potential growth for an econmy...why do we get paid so little? Thinking like an economist...why do you think educators get paid the way they do? What does is say about a society that values its bus drivers and trash collectors more than its educators and social workers? What essentially is going to determine the wages we make? Remember, its all about economics!

The Tax Man Hits Halloween!

2007-10-31T10:22:00.000-07:00

Brilliant or foolish....you decide!

http://www.cnn.com/2007/US/10/31/pumpkin.tax.ap/index.html?iref=mpstoryview

Happy Halloween!

The All Powerful Apple

2007-10-22T09:34:00.000-07:00

I thought this was a really appropriate article given what we were talking about today in class, the power of Apple, iTunes and the iPod.

Others are starting to challenge their market dominance (75% of all downloads come from iTunes!) and this is what the EU will be looking at in terms of monopoly power.

What do you think? Will Apple survive it all? What parts of the article do you agree with or disagree with?

http://www.slate.com/id/2176117/?gt1=10538

Also...I am adding this a bit later to the blog...look here for an update on Microsoft in Europe, freer competition means lower prices for all!

http://www.nytimes.com/2007/10/22/technology/22cnd-soft.html?_r=1&hp&oref=slogin

Writer's Block

2007-10-10T10:43:00.000-07:00

This always happens to me at some point in Microeconomics....I just sometimes have hard time thinking finding things to blog about that would help to reinforce the relevance of the Theory of the Firm and perfect competition in general...I mean, how much can we talk about agricultural prices? True...ethanol, corn and tortillas are a pretty interesting topic...but then we just end up looking at supply and demand and we have been there, done that. So I am calling on you to give me some ideas...what could I be trolling the internet for? Topics, industries, issues etc?

I can't wait to get your advise!

What Would You Do?

2007-10-02T04:07:00.000-07:00

I found this article very interesting...what would you do and how would economics impact your decision? For the sake of this exercise, lets assume you like Radiohead.

http://www.time.com/time/arts/article/0,8599,1666973,00.html?cnn=yes

I am Canadian

2007-09-19T10:41:00.000-07:00

Sorry, I have been a very bad blogger...I think I was Chacoed (can that be a new Lincoln word?). I am still trying to dig out from the time in Chaco and the Chaco induced fatigue...I think I will be okay by next week, but its still not a great excuse for not blogging when we have been talking about one of my favorite subjects in economics...elasticity! Elasticity just flips the demand concept on its head! So many of the things we do as consumers don't really make sense....A Marc Jacobs purse anyone? (Hey...but at least it is leather).

Advertising is such a powerful tool for business to create elasticity for their product and thus increase their profits. The more inelastic your good can become, the more you can charge and not diminish your profits because the more inelastic your product is...the less a change in price will affect quantity demand.

The following commercial known as The Rant was an extremely successful marketing campaign for Molson Breweries, a Canadian owned and operated firm. The company saw their market share increase by 3% while their closest rival Labatt's decreased by 3%. After this campaign, Molson emerged as the largest brewer in Canada.

http://www.youtube.com/watch?v=Du-3DZILy2M

Why do you think this campaign was so successful? Can you link to your post another commercial you think might have made and impact on the elasticity of a product? Remember, keep it clean people!

Reflections on Chaco

2007-09-11T06:24:00.000-07:00

Well, as I am sure some of you are aware....the Chaco trip got stranded up in Residencia for an extra day due to the Aerolineas strike. This trip has been filled with issues related to economics when you sit back and think about it. Aerolineas is a monopoly and thus they have an enormous amount of market power, thus their ability to do what they have done and get the results they do. Also our time in Chaco makes me think a great deal about so many issues related to development we learned about last year in IB. I kept thinking about this issue of aid when we were passing out donations in the various schools and the effectiveness of aid.

So for this blog, I invite the students who participated on Chaco to reflect on their trip and the economic lessons they can take from what they experienced. Please feel free to let your mind wander and make connections.

For the students who are getting to enjoy their Teacher´s Day...I ask you to read their reflections and the lessons they take from Chaco about economics and then later post questions and responses to their reflections. Be sure in doing this to make clear who you are addressing or what issues you are asking about.

See you tomorrow!

US has Highest Productivity Rates

2007-09-03T03:49:00.000-07:00

What do you think of this?

http://www.cnn.com/2007/BUSINESS/09/02/un.productivity.ap/index.html

Remember to think like an economist.

Ah...Incentives and Cheating...Sound Familiar?

2007-08-24T07:28:00.000-07:00

Just a quick post to link to the Freakeconomics blog via the NYTimes...maybe I should have you guys reading some of this...

Remember Mankiw and his principals...people respond to incentives.

http://freakonomics.blogs.nytimes.com/2007/08/23/cheating-to-be-hot/

Have a great weekend!

Never Underestimate the Total Value of Your Education

2007-08-22T08:28:00.000-07:00

After talking quite a bit today about education and how in terms of opportunity costs it is to our advantage to seek out more education because it benefits us in the long run (e.g. you make more money over the course of your life). However, we have to remember there are strong connections between your education and they way it benefits society...this is why countries are so concerned about the state of their national educational systems. From a government perspective, they too are willing to bear the costs and the opportunity costs of paying for some level of education in their countries. What we were talking about today made me think of some wonderful articles I read this weekend on the plane on the way to Rio. In the international issue of Newsweek they examined the global race in education and how it is shaping up globally and why more countries are beginning to focus on improving their higher education.

http://www.msnbc.msn.com/id/20226758/site/newsweek/

How does what you have read relate to the concepts of labor and the PPC?

What is the total value of your education to more than just yourself?

Should the US be worried? If they are not...what might happen to their PPC in the future and why?

Address whatever aspects of the above you find most relevant, feel free to engage in conversation about this issue and I strongly encourage you to ready the other articles related to the subject of global education, it really was a very interesting issue.

The Dismal Science?

2007-08-14T11:32:00.000-07:00

I have been spending a lot of time on the internet figuring out the wiki etc (remember, work in progress! I am sure that is becoming my mantra). I ran across this article and I though you might enjoy it as budding economists

http://www.bobmcteer.com/articles/dismalscience.html

What are your thoughts?

Well, Now You Know I Love You Tube

2007-08-09T05:16:00.001-07:00

Hi Guys,

Thanks for a great class today, here is the link to the video I did not have time to show...

http://www.youtube.com/watch?v=I2QHj75Ulmo

What is the message from this about economics? Does this make any connections for you?

See you tomorrow!

Vacation is Over

2007-08-07T09:57:00.000-07:00

Hi Guys,

Just a quick note to ask you to please not go tonight into all of the other blog posts and start commenting on them. Really, if you respond really late you lose the benefit of a blog, which is conversation when it is relevant. So please...no more posting until I start posting again later this week for class, at that time, I will expect you to be more timely bloggers!

See you tomorrow :)

Where in the World is Ms. Stephens...Where in the World are You?

2007-08-02T11:03:00.000-07:00

Hey Guys!

First off, sorry I have been out of contact but it appears most of you all have been MIA as well! Remember, this summer blog was an assignment and it is worth points, doing all of your blogging the day before schools starts is not really what I had in mind. Pretty disappointing.

Okay...so where have I been? Because to me, it relates to Economics (actually, everything relates to Economics). I have been in Bakersfield, CA with my family for the past week and a half and I have not been able to really use the internet because my parents have dial-up and it takes forever to do anything online. My mom says she has all the time in the world (she is retired) so she does not mind waiting...I on the other hand have 2 weeks in the states, shopping to do, friends to see, movies to catch up on and I do not have time to wait around for the dial-up connection. Plus, because my hometown is not a tourist town, there are no internet cafes etc. Absolutely nowhere to get a fast connection....thus, no blog for the past few weeks. But now I am in SF and on a wireless connection and thus the blog returns because I can do it quickly and not waste time. So that is my sad story....do you see how it might related to economics? Any ideas?

Just speculate!

Also, remember to fill out your blog log to turn in on Wednesday (it is posted at www.lincoln.edu.ar/stephens/ go to the IB Econ page and you will see the document. I will blog one more time before then, probably on Sunday.

Should Junk Food be Treated Like Cigarettes?

2007-07-19T04:36:00.000-07:00

Sorry I have not been blogging as much as I would like to! I have been so busy with my program and I have had problems with Blogger for the past few days. I will be out of blogging touch for the next few days as I travel back to the United States for a couple of weeks before I come back to Buenos Aires.

In the meantime, chew on this one a bit...some producers of junk food are voluntarily deciding to limit their advertising to children under the age of 12. It makes me think about all of the regulation on cigarette advertisers in the United States. In the US, you cannot advertise within a certain range of schools, you cannot use cartoon characters to advertise (so long Joe Camel) and you have not been able to advertise for the longest time on television. Is this the future looming for the junk food industry in the United States?

Get a feel for this issue by reading the following article from the NY Times:
http://www.nytimes.com/2007/07/18/business/18food.html?em&ex=1184990400&en=2a5ab37cdc2e31e1&ei=5087%0A

What do you think...should the government regulate the producers of junk food? Its bad for us, just like cigarettes and alcohol are and the government severely limits their advertising.

I look forward to your responses!

The Politics of Chocolate

2007-07-12T13:54:00.000-07:00

Do you like chocolate? How much are you willing to pay? What might make the price of chocolate go up? A sudden surge in people's desire to eat chocolate? Valentines and a rush to buy all things chocolate? How about a bad storm that destroys cocoa plants in a cocoa producing region? What about war?

http://www.forbes.com/feeds/ap/2007/07/06/ap3890788.html

This is the reason for the recent surge in prices of cocoa, though the article rightly points out in the long run it is unlikely to have a large impact on the price of a chocolate bar, what is important here is to observe the connection between politics and the prices we pay. Uhmmm....gasoline prices anyone?

How might the ups and downs of these prices be avoided in the future? What can be done about the volatile nature of gasoline prices? Ideas???

Three more weeks and we are back in school!

Stong Dollar or Weak Dollar?

2007-07-07T09:50:00.000-07:00

Well, many of us are out of the country and travelling to various countries around the world and no doubt spending lots of money. Personally, I am here in England suffering from serious sticker shock at the prices. Last year when I was here taking classes it was $1.85 to the British Pound. This year I have to give $2.00 to get 1 British Pound and just four-five years ago I only had to give $1.65 to get a British Pound. This country is almost 25% more expensive for me than it was just a few years ago. The dollar is weak and from my perspective that is terrible...I am make dollars, I am travelling on the dollar and getting poor by the minute. I just had a $7 coffee this morning!But really that is only one side of the story, while a weak dollar may not be my preference, its not all bad. Check out the following article from the NY Times, are you starting to see a pattern here? It is a great source for business news!

http://www.nytimes.com/reuters/business/business-volkswagen-us.html

Argentina faces a similar situation...a weak peso and for Argentines who want to travel it is extraordinarily expensive for them to go to the states....but what are some ways that a weak peso has helped Argentina? Give only 1 example...leave some ideas for other folks!

Anybody Out There?

2007-06-26T13:18:00.000-07:00

Hey Guys,

Well, I am back from my vacation and here in not so sunny Plymouth, England (the land of my forefathers...or so they tell me!).

I was a little disappointed with the level of activity on the Starbucks blog. So what I would like you to do is check out the IB Econ block because those guys have caught the blogging bug! They have had a wonderful and engaging conversation about Starbucks, full of opinions and predictions for the fate of Starbucks in Buenos Aires.

https://www.blogger.com/comment.g?blogID=32892110&postID=6254650743619018673

What do you think? Which side do you agree with and why?

Venti Dulce de Leche Frappachino?

2007-06-13T15:12:00.000-07:00

First a couple of notes, posted online on the website is a blog record sheet for you to complete before you return to school in August. You simply need to download and fill out the form. You can find it at www.lincoln.edu.ar/stephens/.

Also...remember that you must blog at least once a week to meet the minimum summer assignment requirements, minimum will get you a B, not an A! Going above and beyond gets you an A. Also remember if you are on vacation etc. you can catch up with other blog posts when you return. Now....on to the economics.I generally try to find blog articles in English, but occasionally I might find something about Argentina in the Spanish language news. This article being a great example of this. Be sure to follow this link thttp://ar.news.yahoo.com/s/19052007/44/n-business-cadena-norteamericana-starbucks-desembarca-pa-xed-s.html the article is about Starbucks planning on opening up a franchise here in Buenos Aires in 2008.

What do you thinking about Starbucks coming here? Try to go beyond the yeah its good, I like Starbucks or it's bad because Starbucks and companies like it are taking over the world, blah, blah, blah. Think more in terms of why you think they might be coming here (they will only come if they think they have a chance of doing well and making money) Do you think they will do well in Buenos Aires? If so why, if not why not? Try to think about why Starbucks might think it is a good idea to be in Buenos Aires and what might be some good reasons they might be wrong?

As for blogging this is all you are getting from me until about June 24th, I should be pretty much out of internet contact for the next week or so.

Have a great first week of vacation!

Welcome to the AP Economics Blog

2007-05-23T08:07:00.000-07:00

Yes, I will admit that it may seem cruel of me to give you summer homework, but I swear this should be fun and relatively painless! Plus, it introduces you to an important aspect of this class....blogging.

Why do I blog? As you will soon see, in our economics class we wrestle with a great deal of complicated theory and we sometimes do not have the time I would like to talk about the real world implications and importance of the theories in our everyday lives. The blog is the solution to this conundrum. Our class will exist in two spheres; the in class and the virtual. I hope you enjoy the experience, I can personally attest that is has enhanced my experience of teaching the class. It makes me pay more attention to the world of economics that surrounds us all and hopefully this in turn will help you to see the economics of the world in which you live.

Plan on checking in once a week over the summer to check out what I have been up to or come across over the summer in terms of economics. Feel free to ask questions, post other links to articles or respond to your classmates. My expectation is you will respond at least once a week. I will attempt to post a few times a week, economic news cooperating of course.

So here is your first assignment....what do you think about having a blog for this class? How do you feel about this being a class requirement? Is there a blogger in you?

Questions, Questions, Questions

2007-02-19T12:28:00.000-08:00

Hey Guys,

I am so sorry I am going to miss more school, it could be up to two weeks. This is why I have switched the units around. I think that you can cover developmental economics easily without me. It is very straightforward and requires no new graphs!

But if you have questions, use the blog to post them and I will make sure to check back here every day.

Good luck and I hope you enjoy learning about the developing world.
Ms. Stephens

Econcomic Survival on the Backs of Children

2006-11-20T09:35:00.000-08:00

Much of what we discus in economics is theory based; graphs, problem solving, etc. There is a whole other human componet that can be all too easily lost.

For intance, as the New York Times reminds us today many countries around the world rely on children, some as young at six years old as a source of labor. Some people in their countries would consider them a vital source of labor, thus income and a economic agent in the market system. They are cheap, they do not challenge their bosses and therefore they are a vital economic interest. But in the meantime, they are not being educated, well nourished or valued.

Read the article on some of these children from the New York Times, you will find the word document entitled Africa's World of Forced Labor posted on the school website at

www.lincoln.edu.ar/stephens/

What are some of the economic issues you see present in this article? We can link human rights and economics. How? Is it important to know if this is how countries help to grow their economies? I can't wait to see your ideas.

The Trials and Tribulation of Wealth

2006-11-08T09:17:00.000-08:00

In the vien of the Consumer Price Index (CPI) consider this...and think about what this means to us here in Argentina...

The Basics: It hurts to be rich
You think you’ve got it bad?
Inflation on caviar, imported watches and other luxury goods far outstrips price increases for beer and Hamburger Helper.
By Scott Burns

So, you think things are tough for middle-income workers and the poor?Well, open your heart. Consider the plight of the affluent.Like Sisyphus, who was condemned to pushing a rock up a hill forever, the affluent are doomed to chasing high-priced luxury objects that will be beyond their income all of their lives. This grim reality was confirmed, once again, by the CLEW index, the Cost of Living Extremely Well index, that Forbes magazine has tracked since 1976.

The Oct. 10, 2005 issue tells us that while the Consumer Price Index rose 3.6% from 2004 to 2005, the CLEW index rose 4%. Worse, the price of Dom Perignon had soared a monstrous 8%.In fact, this has been going on for a long time. One of my first newspaper columns, written as a freelancer for The Boston Globe in 1975, was titled "The La Dolce Vita Index." The column showed that the horrors of the Consumer Price Index (up 7% in 1975) were minor. The price of the really good stuff was rising even faster. Wall Street analyst Ray DeVoe created a similar index (the Cost of Living It Up) in the same year. One of the high-quality champagne makers created a bubbly index a few years later. Affluence is expensiveAll showed the same thing. Regardless of the precise contents of the index, the cost of luxury goods was rising faster than the cost of ordinary stuff. Indeed, since 1976 the CPI has risen 344%, but the CLEW index has risen nearly twice as much, 680%. That's a big difference.

It's a good bet that whatever the object of your luxury dreams, its price is rising faster than the price of Rolling Rock beer. My personal totem object is a watch. Not just any watch. This one is made by Patek Philippe, arguably the world's best watchmaker. It isn't one of their fancy models. Those routinely carry price tags you might see on a small house in Aspen.No, my totem object is the classic Calatrava 3520D J the one with the ultra-thin gold case and alligator strap. It has a crisp, austere face with Roman numerals. So simple it has no second hand. And you actually have to wind it, if you can imagine that.Its price increased by 9% over the last year, so it now costs $17,150. So the watch I have coveted (but never purchased) now costs $17,050 more than I could bring myself to pay for a watch. That's up from just $15,735 more than I could bring myself to pay for a watch in 2004.

Why rich toys rise faster...
Basically, the best stuff is rising out of reach even faster than everyday stuff -- you know, things like food, gasoline and health care.This raises a thorny question. Why is this happening?The answer is disheartening and encouraging at the same time.While basic consumer demand can be satisfied simply because we can only drink so much milk and chew so much granola, luxury goods are always in short supply. Luxury is pure demand/pull. The moment the demand for one level of luxury is sated, a higher level is created. The empty-glass brigade doesn't want to believe it, but the number of affluent people -- and their supply of money -- continue to outpace everything else. This includes the production of luxury goods. The higher you climb on the affluence/luxury ladder, the more likely the shortage of coveted objects.

A sign the economy’s good...
That's the way it is. Patek, I am told, can make only 25,000 watches a year. That's not very many watches for a world with 6.5 billion people, virtually all of whom would rather be rich and each of whom probably obsesses over a personal totem object like my unpurchased Patek. Talk about dogs chasing their tails.So what's encouraging?Simply this. As long as luxury goods are inflating faster than the regular stuff, the economy is cooking. There is a good chance that just about everyone is doing OK. When luxury goods go on sale, everyone is in trouble.

QUESTION:What does this mean to US, living here in Argentina? What personal significance can you take away from this? Can you relate elasticity to any of this?

This is one of my favorite current topics related to the inflation we are experiencing in Buenos Aires...I have lots to say on this...but I want to see what you think first.

A Flawed CPI?

2006-11-08T09:08:00.000-08:00

As we were talking about today, CPI is the general statistic used in the United States to measure inflation. But it is often criticized for its limiations. The following article really does a good job of summarizing this argument from a consumers perspective...

Be sure to look for questions at the end.

Why Inflation Seems To Have Sharper Teeth Than the CPI Suggests
David Wessel. Wall Street Journal. (Eastern edition). New York, N.Y.: Mar 16, 2006. pg. A.2

WRITE ABOUT inflation, and readers are quick to complain that the U.S. government's consumer-price index fails to capture the reality of rising prices."If you did your own personal study of inflation in your neighborhood . . . where you shop, you would be appalled at how much prices go up without being reported as inflation," Reggie Marselus emailed from Lenexa, Kan. "Government inflation figures are the most bogus numbers reported in the entire economic world."

The Bureau of Labor Statistics releases the latest CPI this morning. Forecasters say a drop in gasoline prices in February will keep the monthly increase in the CPI to a comfortable 0.1%, though that still is a sharp 3.7% above a year ago. Wall Street traders, private forecasters and Federal Reserve officials will scrutinize the details to divine if energy-price increases are spilling over into other items, pushing up inflation. Americans coping with rising health-insurance premiums, or paying college or private-school tuition bills, or trying to buy a house, look at those numbers and scoff. The cost of living, they often say, seems to climb a lot faster. Some economists don't much like the most commonly used version of the CPI, either. They say it overstates inflation, but that is another story.

SOME CONSUMER skepticism is inherent in the way a price index is calculated. It is an average -- and no one is average. It measures the change in prices in a basket of goods and services that matches no one person's shopping list: Medical care accounts for 4.8% of the CPI. But if you are chronically ill, you will notice rising health-care costs more. College tuition accounts for 1.1%. But if you have a child in college -- well, you get the idea. The CPI is a national average: The fine print shows that prices rose 1.7% in 2005 in the San Francisco area, but 4.8% in the Miami area.Monthly changes in the CPI, the ones that get the most media attention, are adjusted to remove usual seasonal fluctuations. "In many cases, we may talk about a component declining when it actually rose, but less than it historically did in that particular month," says Patrick Jackman, the Bureau of Labor Statistics price maven. "It doesn't make much sense to the man in the street to tell him that gasoline prices declined, when they just rose less than the seasonal pattern expects."U.S. government inflation figures also recognize that a $1,500 personal computer available today is more powerful than a $1,500 PC purchased three years ago. If it is twice as powerful but carries the same price tag, then the BLS counts that as a price cut, a decline that offsets price increases in other things. And then there is housing. To the consternation of some economists, the CPI doesn't track the rising price of houses directly, but instead relies on rents, which have been rising more slowly than house prices. The rationale: The CPI tracks the cost of living in a house, not its investment value. "Homeowners are assumed to rent to themselves at the market rent," the BLS explains. Japan does the same. Europe, in contrast, currently excludes owner-occupied houses from its pan- European price index. The mismatch between official inflation statistics and consumer perceptions reflects more than the fine points of measurement. When consumers get a good deal -- a bargain airfare on the Internet or a case of soda on special -- they think they are great shoppers. When consumers see their electric bills go up, they curse rising prices. They don't look at airfare savings as offsetting electric-bill increases. They don't notice what the CPI does: The price of men's pants has fallen more than 5% in the past year.

THAT'S NOT ALL. Consumers who complain that the government understates inflation may really be saying that their paychecks don't seem to go as far as they once did. For many Americans, that is true. But it isn't that prices are going up faster than the government estimates. It is that their wages aren't keeping pace. Blame the boss, not the BLS. Not so long ago, inflation preoccupied Americans. A check of the Factiva electronic archives -- jointly owned by Dow Jones & Co., publisher of this newspaper, and Reuters Group PLC -- found 760,288 mentions of "inflation" from 1986 through 1996 in all publications tracked, outnumbering 636,074 mentions of "sex."Then inflation receded. In the past 10 years, "sex" has been mentioned 3,317,716 times and "inflation" just 3,085,544 times. But the complaining -- about the inflation measures, that is -- never stops.

Making Sense of This...Many of you are going off to college soon. How does the described measurement of the CPI affect you? Additionally, if the CPI is this controversial (some think it overstates, others think it understates)...can you suggest a better way? What would it be and why? A quick browsing of the internet might help here!

Pimps and Hookers...Finally a Part of GDP

2006-11-06T10:57:00.000-08:00

Yes, that is right folks...prostitution is being added into the Greek GDP.

Read on...
Prostitutes, smugglers a boost Greek economy
POSTED: 1527 GMT (2327 HKT), September 27, 2006ATHENS, Greece (Reuters) -- Prostitutes and smugglers will give the Greek economy an unexpected boost as their illicit activities will now be counted in the country's official economic output, a senior official said on Wednesday.Under pressure from the European Union to cut its deficits, Greece is revising its gross domestic product to include part of the booming black economy, boosting its output by at least 10 percent in 2006, the country's chief statistician told Reuters."The revised GDP will include some money from illegal activities, such as money from cigarette and drinks smuggling, prostitution and money laundering," National Statistics Service chief Manolis Kontopyrakis said in an interview.Greece's economic output was 180 billion euros ($228 billion) in 2005 and is estimated at 194 billion euros this year, while the black economy is estimated at about 40-60 billion euros a year.
Copyright 2006 Reuters. All rights reserved.

Do you think this is a good idea? Should illegal activies be counted as legitimate production? What does this article indicate about the reliability of GDP as a measurement of economic activity in an economy....and if Greece goes there, how long before the rest of Europe?

Return of the Blog!

2006-10-30T09:47:00.000-08:00

My life is less crazy, or at least I have gotten used to it and I just love how blogging is going with my AP Econ class, so I decided to resurrect the blog.

Let see how it goes this time.

So, starting off, first questions or idea...getting us ready for Macroeconomics...

Growth for them...good for us???
The United States has benefited greatly from China's rapid economic progress after its launch of market-oriented reforms and entry to the World Trade Organization, US Trade Representative Susan Schwab said yesterday. The impact of China's decision to embrace reforms and join the structured international trading system was "nothing short of breathtaking," she told an event hosted by the American Chamber of Commerce. Over the past 20 years, China's economy had grown by nearly 10 per cent a year, with some 377 million people lifted out of poverty. "We are now, ourselves, major beneficiaries of China's rapid development. US manufacturers, farmers and service providers have seen exports to China grow an average of 22 per cent a year since China joined the WTO in December 2001, and US consumers enjoy access to a wide array of high-quality, competitively-priced products," said Schwab.
Jiang Wei, China Daily

According to this article, what do we mean by the term growth? Do you think China's growth is good for the United States? What is controversial about China and its growth? Do you think their growth could actually "hurt" the United States?

Welcome to just some of the topics we will cover in the coming weeks!

Happy blogging...
Ms. Stephens

A Crazy Introduction to Demand

2006-09-13T13:08:00.000-07:00

Hey Guys, remember this one is worth some extra-credit! Read the following article and then consider the question at the end.

iBook Sale Creates Chaos
Chaos erupted yesterday morning at Richmond International Raceway as people stampeded through the gates in a rush to buy used iBook laptops for $50 each.
Mothers clutched their children for protection, people screamed as they were knocked to the ground, a stroller was demolished, cars inched through the crowd.
"I can't believe people are so barbaric," said Grace Wang, a rising senior at Henrico County's Godwin High School.
The crowd started forming at 1:30 a.m. as Henrico residents and taxpayers began to arrive. By the time dawn broke, people on foot had formed a line half a mile long. Others waited in cars parked nearby or milled about the entrance to RIR. An official estimate put the crowd at 5,500. Other observers estimated a crowd size more than twice that.
When gates opened just before 7 a.m., the crowd had already grown surly, many in the crowd yelling to police officers who said they were just trying to keep people from "inciting a riot." When the gates swung open, the stampede -- literally -- began.
"We were just coming in the door and everyone was just pushing," said one J.R. Tucker High School student who was sitting on the ground with a bloody foot after getting caught in the rush. "We just fell down and everyone trampled on us."
Several people sustained minor injuries. One person was taken to the hospital with a leg injury, Battalion Chief Steve Wood said at an afternoon news conference. In all, 17 people were treated, the majority for heat- or diabetic-related problems, he said.
Inside the gates, a second crush surged outside the warehouse where the laptops were being sold as people pushed to get through the door. Police struggled to keep the crowd under control and relieve pressure on those at the front.
Lester Caudill consoled his crying 14-year-old daughter outside the warehouse, while waiting for a family member who made it inside. He said his family had waited at the gate since 3 a.m.
"It's like the people are going to die if they don't get a computer," he said. "This is like the last chopper out of Saigon."
The scene calmed significantly when police back-up arrived and barricades were erected. Inside the warehouse, the pace slowed and people civilly purchased all 1,000 laptops for sale.
The schools are getting a new fleet of Dell laptops for high school students and teachers next year, so the county sold some of the Apple iBooks used by students during the past four years.
The sale was originally to be open to the general public but Henrico supervisors changed the county code to give residents or taxpayers first dibs.
Paul Proto, director of general services for Henrico, said he believes the county took all the necessary measures for the sale. Organizers anticipated a crowd and arranged for five off-duty officers to monitor the gate. Back-up officers were soon called.
"What occurred at the gate was unfortunate," Henrico police Chief H.W. Stanley Jr. said. "If we had had 100 officers at the gate we would have had a problem."
Police spokesman Lt. Doug Perry said many responsible residents turned out, but apparently so did some irresponsible ones.
"A few bad apples forced their way in and caused some people to be injured," Perry said. "Our officers immediately took control of the situation with the resources we had here."
Some who had waited criticized the event's organization and offered suggestions, including shutting down the sale amid the chaos or employing another sale method. Proto said setting a firm price is the typical method of selling surplus computer equipment and that auctioning or soliciting bids for the items were not practical options.
Some people managed to make money off the sale -- one man sold his laptop on-site for $200. An eBay entrepreneur was offering 100 T-shirts for $7.50 apiece that read: "I went to Henrico County for a $50 iBook . . . but all I got was kicked in the [vulgarity]." By 7 p.m. a dozen had been ordered.
Donetta Graham, still recovering from a recent back surgery, arrived at 5:30 a.m. to purchase an iBook for her disabled daughter. In line, she was felled by dehydration but maintained her place with the help of a stranger who donated a chair.
She said she was about 10 people away from the warehouse door when the iBooks sold out.
"I'm crushed," she said. "I wanted a computer for my daughter so badly. That's her saving grace -- she's really good on the computer."

QUESTION:

Where did they go wrong???

Circular Flow

2006-09-08T13:03:00.000-07:00

I forgot to get this up on the school website for the weekend, hopefully you will check here! If not...it is just another way for you to, at some point, understand the power of the blog!

Circular Flow Diagram
http://ingrimayne.com/econ/TheFirm/CircularFlow.html

Have a great three day weekend.

We Are Surrounded by Economics

2006-08-29T13:59:00.000-07:00

Okay...I know, blogging? Me? Well, I have started doing it in AP Economics and I am finding blogging about Econ really, really useful in helping you with questions, ideas, suggesting articles to look at and just plain fun. I can't get enough!

What do you think? Good idea? Useful idea? Do you think you would use it to find out more about economics, ask questions and just enjoy being surrounded by Econ?

Let me know what you think...who knows, there could be some extra-credit up here from time to time!
Ms. Stephens