Post 15

Leading indicators are things that change before the economy does. For example:

1.     Average weekly hours of manufacturing

2.     Average weekly initial claims for unemployment insurance

3.     Stock prices

Lagging indicators are the opposite of leading indicators; they change after the economy does. For example:

1.     Unemployment

2.     The value of outstanding commercial and industrial loans

3.     The change in labor cost per unit of labor output

Coincident indicators occur directly with the economy. For example:

1.     Income

2.     GDP

3.     Manufacturing and trade sales

Leading, lagging, and coincident indicators are all indicators of economic change. There are many examples of each indicator, but I have picked what I think are the top three.

Post 14

After Mr. Campbell showed us the "My Humps" video and the "Business Cycle Rap" video, I better understood the business cycle, which really isn't a cycle at all. Rather, the business cycle is it consists of recurring fluctuations in economic activity consisting of recession and recovery and growth and decline. Both of the videos were accurate and informative in describing the business cycle. The “My Humps” video was very entertaining and informative. The creators of the video included many definitions and an accurate description of what the business cycles really is. The Qwiki video, however was the most helpful because I could really understand what they were explaining. The attached website was also very helpful to my understanding the business cycle.
 The Business Cycle

Post 13

What I learned from taking three online quizzes.

1.       National income accounting provides information about a nation's economic activities.

2.       To actually compute GDP, economists use the output-expenditure model. The model adds the output produced by the four sectors of the product market.

3.       Personal consumption expenditures include durable goods, nondurable goods, and services.

4.       Economists divide gross investment into two subcategories: fixed investment and inventory investment.

5.       Government transfer payments are not included when calculating government purchases. Transfer payments include Social Security payments and various types of government aid.

6.       To measure changes in prices over time, economists use price indexes.

7.       Barter transactions, housework, and do-it-yourself home repairs are examples of nonmarket activities. Transactions that do not involve money and are not recorded are nonmarket activities.

8.       To calculate national income, economists subtract subsidies and indirect taxes from net national product.

9.       The business cycle is divided into four stages.

10.   The contraction phase is a period of business slowdown.

11.   Many economists agree that the level of business investment, availability of money and credit, expectations about future economic activity, and external factors affect the business cycle.

12.   Coincident indicators change as the economy moves from one phase of the business cycle to another.

13.   Lagging indicators help economists predict the duration of economic upturns or downturns.

14.   Economic indicators are collected by the U.S. Department of Commerce.

15.   Capital deepening is an increase in the amount of capital goods available per worker.

Post 12

Mr. Campbell asked us to write a letter to the editor explaining why GDP is a faulty indicator.

Dear Editor,

“Gross domestic product, the leading economic measurement, is outdated and misleading.” CNN agrees with my opinion that the USA should adopt a new economic gauge. GDP is the sum of products and services bought and sold, with no distinctions between transactions that add to well-being, and those that diminish it. Instead of separating costs from benefits, and productive activities from destructive ones, the GDP assumes that every monetary transaction adds to well-being. This is why the GDP is a faulty indicator of the economy. The USA should consider using a method that takes depreciation into account, like NNP or NDP.

Sincerely,

Tara

Post 11

Formula for calculating GDP.

Step One: Calculate consumer spending

Step Two: Calculate investments

Step Three: Calculate government purchases

Step Four: Calculate net exports by subtracting imports from exports.

Step Five: Add them all together

M= C + I + G + NX (Where M equals both GDP and the national income, C equals consumer spending, I equals investments, G equals government purchases, and NX equals net exports.)

RULES:

1)     Must be made in your country

2)     Must be a final good or service

3)     Must be produced within country’s border

Post 10

After reading a section from my bood on macroeconomics, Mr. Campbell asked us to respond with our thoughts.

Macroeconomics is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. So when we learn about macroeconomics, we will learn about economics on a large scale. The study of our country’s economy interests me, so as I look forward to that as we begin to study macroeconomics. I hope to learn about 1) Why the economy has bad times and good times, 2) how much influence the government has over the economy, and 3) what makes inflation occur.

Post 9

Arthur C Clarke once said, “Any sufficiently advanced technology is indistinguishable from magic.” Clarke’s opinion on technology is echoed around the world as humans delve further into the information age. Technology is beautiful; it saves lives, allows scientists to explore outer space, helps explain the world, allows for easier communication, helps the environment humans have so carelessly neglected, and makes information more accessible.  From the Mesopotamian invention of the wheel to the modern inventions of computers, to inventions that save lives like vaccines, to environmentally sound inventions like hybrid cars, humans have always been innovators, and this innovation has given the world the gift of technology.