tag:blogger.com,1999:blog-72540182241220581982024-03-14T05:45:08.598+08:00Economics for the confusedEconomics for High School studentsMartin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.comBlogger37125tag:blogger.com,1999:blog-7254018224122058198.post-89435020863224531042010-11-24T06:18:00.002+08:002010-11-24T06:22:14.905+08:00What are Economic Models and why do we need them?<!--StartFragment--> <br />
<div class="MsoNormal"><span lang="EN-US" style="font-family: Verdana;">Economists love economic models!</span><span lang="EN-US" style="font-family: Times;"><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-US" style="font-family: Verdana;">An <b>Economic Model</b> is a simplified version of the ''real world" that can be used to explain, analyse and predict complicated economic systems. Examples of economic models that we study on our course include:</span><span lang="EN-US" style="font-family: Times;"><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal" style="margin-left: 36.0pt; mso-layout-grid-align: none; mso-list: l0 level1 lfo1; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-autospace: none; text-indent: -36.0pt;"><span lang="EN-US" style="font-family: Times;">•<span style="font: 7.0pt "Times New Roman";"><span class="Apple-style-span" style="font-size: small;"> </span></span></span><span lang="EN-US" style="font-family: Verdana;">Demand and Supply curves</span><span lang="EN-US" style="font-family: Times;"><o:p></o:p></span></div><div class="MsoNormal" style="margin-left: 36.0pt; mso-layout-grid-align: none; mso-list: l0 level1 lfo1; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-autospace: none; text-indent: -36.0pt;"><span lang="EN-US" style="font-family: Times;">•<span style="font: 7.0pt "Times New Roman";"><span class="Apple-style-span" style="font-size: small;"> </span></span></span><span lang="EN-US" style="font-family: Verdana;">The Circular Flow of Income</span><span lang="EN-US" style="font-family: Times;"><o:p></o:p></span></div><div class="MsoNormal" style="margin-left: 36.0pt; mso-layout-grid-align: none; mso-list: l0 level1 lfo1; mso-pagination: none; tab-stops: 11.0pt 36.0pt; text-autospace: none; text-indent: -36.0pt;"><span lang="EN-US" style="font-family: Times;">•<span style="font: 7.0pt "Times New Roman";"><span class="Apple-style-span" style="font-size: small;"> </span></span></span><span lang="EN-US" style="font-family: Verdana;">The Production Possibility Curve</span><span lang="EN-US" style="font-family: Times;"><o:p></o:p></span></div><div align="center" class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-align: center; text-autospace: none;"><a href="http://4.bp.blogspot.com/_GtjYDb32EMo/TOw9p5IRgqI/AAAAAAAAARM/7if5GPOl-Fk/s1600/finance-crisis-photo1.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="http://4.bp.blogspot.com/_GtjYDb32EMo/TOw9p5IRgqI/AAAAAAAAARM/7if5GPOl-Fk/s200/finance-crisis-photo1.jpg" width="188" /></a><u><span lang="EN-US" style="font-family: Times;"><o:p><span style="text-decoration: none;"> </span></o:p></span></u></div><div class="MsoNormal"><span lang="EN-US" style="font-family: Verdana;">The real world is a very complicated place, and even the smartest people in the world cant predict the future! For example, most of the worlds richest and smartest people never predicted the recent Global Financial Crisis.</span><span lang="EN-US" style="font-family: Times;"><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><span lang="EN-US" style="font-family: Verdana;">Economic models help up to explain, analyse and predict complicated 'real world' behaviour. Even though models didn't prevent the Global Financial Crisis, Governments did use them to plan for the world’s </span><!--EndFragment-->Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-66094381225674888812010-11-23T12:21:00.002+08:002010-11-24T06:05:01.226+08:00What is Economics, and why do we study it?<div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/_GtjYDb32EMo/TOtBKSSf4lI/AAAAAAAAARI/uTsmvp5EfG4/s1600/Economics433x538.JPG" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="http://3.bp.blogspot.com/_GtjYDb32EMo/TOtBKSSf4lI/AAAAAAAAARI/uTsmvp5EfG4/s320/Economics433x538.JPG" width="257" /></a></div><div class="MsoNormal"><span lang="EN-US" style="font-family: Verdana;">Economics is the <i>social science</i> that studies how a society uses its <i>limited resources</i> to satisfy its <i>unlimited wants and needs</i>.<o:p></o:p></span><br />
<span class="Apple-style-span" style="font-family: Verdana;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Verdana;"> <!--StartFragment--> </span><br />
<span class="Apple-style-span" style="font-family: Verdana;"><div class="MsoNormal"><span lang="EN-US" style="font-family: Verdana;">Lets look at this definition a little more closely.</span></div><div class="MsoListParagraph" style="mso-list: l0 level1 lfo2; text-indent: -18.0pt;"></div><ul><li><span lang="EN-US" style="font-family: Symbol;">·<span style="font: 7.0pt "Times New Roman";"><span class="Apple-style-span" style="font-size: small;"> </span></span></span><i><span lang="EN-US" style="font-family: Verdana;">social science</span></i><span lang="EN-US" style="font-family: Verdana;"> - that is - economics is the study of people, and how they behave. </span></li>
</ul><br />
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo2; text-indent: -18.0pt;"></div><ul><li><span lang="EN-US" style="font-family: Symbol;">·<span style="font: 7.0pt "Times New Roman";"><span class="Apple-style-span" style="font-size: small;"> </span></span></span><i><span lang="EN-US" style="font-family: Verdana;">Limited resources</span></i><span lang="EN-US" style="font-family: Verdana;"> – that is – every person and every country has a limited (or finite) amount of resources.</span></li>
</ul><br />
<div class="MsoNormal" style="margin-left: 36.0pt;"><span lang="EN-US" style="font-family: Verdana;">Resources are <b>production inputs - </b>things used to make products. In economics we use the terms ‘resources’, ‘production inputs’ and ‘factors of production’ to mean the same thing – that is – they are all terms to describe things needed to make products.</span></div><div class="MsoListParagraph" style="mso-list: l0 level1 lfo2; text-indent: -18.0pt;"></div><ul><li><span lang="EN-US" style="font-family: Symbol;">·<span style="font: 7.0pt "Times New Roman";"><span class="Apple-style-span" style="font-size: small;"> </span></span></span><i><span lang="EN-US" style="font-family: Verdana;">unlimited wants and needs – </span></i><span lang="EN-US" style="font-family: Verdana;">that is – every person and every country has a unlimited (or infinite) wants and needs.</span></li>
</ul></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN-US" style="font-family: Verdana;">Another way to look at economics is by stating that ‘Economics is the study of scarcity’. </span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Verdana;"><br />
</span></div><div class="MsoNormal"><span lang="EN-US" style="font-family: Verdana;">This is simply the same idea stated in a different way. Economists state that <i>products are scarce </i>– that is – society cannot produce enough products to satisfy everyone. </span><br />
<span class="Apple-style-span" style="font-family: Verdana;"><br />
</span><br />
<span lang="EN-US" style="font-family: Verdana;">For example, ‘cars are scarce’ because society does not have enough resources to make cars for everyone who wants one. <o:p></o:p></span><br />
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</span><br />
<span class="Apple-style-span" style="font-family: Verdana;">Because we have limited resources, we need Economics as a subject to help us decide 3 questions:</span><br />
<ol><li><span class="Apple-style-span" style="font-family: Verdana;">What we should produce with our limited resources</span></li>
<li><span class="Apple-style-span" style="font-family: Verdana;">How should we produce the products </span></li>
<li><span class="Apple-style-span" style="font-family: Verdana;">Who will get the products we produce</span></li>
</ol><span class="Apple-style-span" style="font-family: Verdana;"><br />
</span></div><div class="MsoNormal"><span lang="EN-US" style="font-family: Verdana;">Its important to study economics for many reasons – for example: it helps <span class="Apple-style-span" style="font-family: Symbol;">in</span></span></div><div class="MsoNormal"></div><ul><li><span lang="EN-US" style="font-family: Symbol;"><span style="font: normal normal normal 7pt/normal 'Times New Roman';"><span class="Apple-style-span" style="font-size: small;"> </span></span></span><span lang="EN-US" style="font-family: Verdana;">Understanding more about the world around us: for example, studying economics helps us to understand why countries trade, why some people get are paid more than others. </span></li>
<li><span class="Apple-style-span" style="font-family: Verdana;">Questioning the economic decisions made on our behalf by our leaders: for example studying economics helps us to understand why Governments subsidise firms that produce certain products (e.g. public schools), but tax others such as cigarette companies </span></li>
</ul><span class="Apple-style-span" style="font-family: Verdana;">If we didn't study economics, we would live in a very different world - perhaps resources would be 100% owned by the most powerful who would use them to meet only their own wants?. Perhaps there would be no trade, and so we would have to make everything for ourselves? </span>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com3tag:blogger.com,1999:blog-7254018224122058198.post-69191415003182177392010-10-13T16:38:00.003+08:002010-10-19T11:29:34.836+08:00How to win a Nobel Prize for Economics <br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/_GtjYDb32EMo/TLV4RzNrcRI/AAAAAAAAARE/52x4PxjKmJ4/s1600/nobelproze.jpg" imageanchor="1" style="clear: left; cssfloat: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" ex="true" height="149" src="http://3.bp.blogspot.com/_GtjYDb32EMo/TLV4RzNrcRI/AAAAAAAAARE/52x4PxjKmJ4/s200/nobelproze.jpg" width="200" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"></td></tr>
</tbody></table> <span style="font-family: Verdana, sans-serif;">The 2010 Nobel Prize for Economics has been awarded to 3 economists Peter Diamond, Dale Mortensen and Christopher Pissarides for their research into markets where buyers and sellers don’t automatically find each other (or in more technical language “markets with search frictions”)</span><br />
<br />
<span style="font-family: Verdana, sans-serif;">Their research has been used in</span><span style="font-family: Verdana, sans-serif;"> lots of different markets, including the markets for used cars, for housing, and even for dating!. However, their ideas have been used most of all to help economists make sense of unemployment.</span><br />
<span class="Apple-style-span" style="font-family: Verdana, sans-serif;"><span class="Apple-style-span" style="font-family: Times;"><br />
</span></span><br />
<span style="font-family: Verdana, sans-serif;">In this post you can see a short video explaining their theory</span><br />
<br />
<div style="text-align: center;"><object height="295" style="background-image: url(http://i1.ytimg.com/vi/8rSq7NP2FHY/hqdefault.jpg);" width="480"><param name="movie" value="http://www.youtube.com/v/8rSq7NP2FHY?fs=1&hl=en_GB"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/8rSq7NP2FHY?fs=1&hl=en_GB" width="480" height="295" allowscriptaccess="never" allowfullscreen="true" wmode="transparent" type="application/x-shockwave-flash"></embed></object></div><br />
<span style="font-family: Verdana, sans-serif;">After watching the video, you can read more about their work by clicking this </span><a href="http://economix.blogs.nytimes.com/2010/10/11/the-work-behind-the-nobel-prize/"><span style="font-family: Verdana, sans-serif;">economix blogsite article</span></a>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-34051440598195419692010-04-18T19:08:00.004+08:002010-04-18T19:57:57.226+08:00What is GDP?We are currently studying Gross Domestic Product (GDP) in class.<br /><br /><strong><span style="color:#ff0000;">1) Start by watching the following video ....</span></strong><br /><br /><br /><br /><p align="center"><object style="WIDTH: 310px; HEIGHT: 261px" width="310" height="261"><param name="movie" value="http://www.youtube.com/v/yUiU_xRPwMc&hl=en_GB&fs=1&color1=0xe1600f&color2=0xfebd01"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/yUiU_xRPwMc&hl=en_GB&fs=1&color1=0xe1600f&color2=0xfebd01" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="480" height="385"></embed></object></p><strong><span style="color:#33cc00;">2)Click on </span></strong><a href="http://news.bbc.co.uk/2/hi/business/88618.stm"><strong><span style="color:#cc6600;">this BBC webpage</span></strong></a><strong><span style="color:#33cc00;"> that has all the remaining information you will need to answer our worksheet on GDP.</span></strong><br /><br /><span style="color:#ff9966;"><strong>3) Find an online resource (eg post on another website, video etc) that helps explain the economic idea of GDP. Make sure that you show it to Mr Hartnett!!</strong></span><br /><br /><strong><span style="color:#cc33cc;">4) Finally, if you have time .... does increasing GDP mean that people get happier? What do you think? Is there a better measure that economists could use?</span></strong>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com1tag:blogger.com,1999:blog-7254018224122058198.post-76883624239744004222009-11-26T19:33:00.004+08:002010-10-19T11:30:26.391+08:00Hong Kong's - a tale of 2 cities<a href="http://1.bp.blogspot.com/_GtjYDb32EMo/Sw5nqnKWnyI/AAAAAAAAAPo/QdpOKwIxavA/s1600/chang.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5408374184283119394" src="http://1.bp.blogspot.com/_GtjYDb32EMo/Sw5nqnKWnyI/AAAAAAAAAPo/QdpOKwIxavA/s200/chang.jpg" style="cursor: hand; float: left; height: 150px; margin: 0px 10px 10px 0px; width: 200px;" /></a>Hong Kong Island has 7 million people, and very limited space to put them - two reasons why it has some of the most expensive properties in the world.<br />
<br />
In Oct 09, <a href="http://news.bbc.co.uk/2/hi/asia-pacific/8310447.stm">a five bedroom luxury apartment sold for US$57m</a> – a world record price that valued the space an amazing $US9,200 per sq ft.<br />
<br />
<a href="http://news.bbc.co.uk/2/hi/business/8377352.stm">This reading and video</a> about Chan Hong Keung, a retired cleaner living in Monkok. Kowloon tells a different story….Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-27694005127751476782009-10-01T18:00:00.003+08:002009-10-01T18:05:14.696+08:00By 2050, 25m more children to go hungry?<a href="http://2.bp.blogspot.com/_GtjYDb32EMo/SsR-M7Qwn1I/AAAAAAAAAPQ/ibKhaLe5UX0/s1600-h/starvingchildren.jpg"><img style="MARGIN: 0px 10px 10px 0px; WIDTH: 200px; FLOAT: left; HEIGHT: 120px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5387569814773473106" border="0" alt="" src="http://2.bp.blogspot.com/_GtjYDb32EMo/SsR-M7Qwn1I/AAAAAAAAAPQ/ibKhaLe5UX0/s200/starvingchildren.jpg" /></a><strong>Environmental Objectives</strong><br /><a href="http://www.guardian.co.uk/environment/2009/sep/30/food-crisis-malnurtrition-climate-change">This Guardian report </a>describes how the International Food Policy Research Institute (IFPRI) has reported that if the world does not solve problems caused by global warming, then <span style="color:#ff0000;"><strong>25, 000,000</strong></span> <span style="color:#ff0000;"><strong>more children</strong></span> will go hungry by the middle of this century as climate change and leads to food shortages.Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-14830900503348304392009-09-19T21:24:00.003+08:002009-09-19T21:29:48.409+08:00The Money Markets explained<a href="http://1.bp.blogspot.com/_GtjYDb32EMo/SrTcM2ATtDI/AAAAAAAAAPI/F0g1-fpmHTE/s1600-h/moneymarket.jpg"><img style="MARGIN: 0px 10px 10px 0px; WIDTH: 130px; FLOAT: left; HEIGHT: 91px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5383169567827932210" border="0" alt="" src="http://1.bp.blogspot.com/_GtjYDb32EMo/SrTcM2ATtDI/AAAAAAAAAPI/F0g1-fpmHTE/s200/moneymarket.jpg" /></a><br />A Short Video on how the Money Markets work<br /><br /><iframe src='http://video.economist.com/linking/index.jsp?skin=oneclip&ehv=http://audiovideo.economist.com/&fr_story=854917802bfdf2de95666f909cf474bfa00d4b92&rf=ev&hl=true' width=402 height=336 scrolling='no' frameborder=0 marginwidth=0 marginheight=0></iframe>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-75679875084740781862009-09-19T18:32:00.004+08:002009-09-19T18:37:04.929+08:00The Economic Impact of Swine Flu<a href="http://2.bp.blogspot.com/_GtjYDb32EMo/SrSzvDp7jII/AAAAAAAAAO4/-uZ1vYSNyZQ/s1600-h/swineflu.jpg"><img style="MARGIN: 0px 0px 10px 10px; WIDTH: 137px; FLOAT: right; HEIGHT: 103px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5383125075630984322" border="0" alt="" src="http://2.bp.blogspot.com/_GtjYDb32EMo/SrSzvDp7jII/AAAAAAAAAO4/-uZ1vYSNyZQ/s200/swineflu.jpg" /></a>A short video from Business Week Magazine - about the possible impact on macroeconomic objectives of Swine Flu. Wath this, but ....dont panic...!<br /><br /><br /><p align="center"><iframe height="262" marginheight="0" src="http://feedroom.businessweek.com/linking/index.jsp?skin=twoclip&fr_story=c4fb92734031b30435750e7cce12cff3cf9086ae&rf=ev&hl=true" frameborder="0" width="302" marginwidth="0" scrolling="no"></iframe></p>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-19716640947056319802009-09-16T17:38:00.005+08:002009-09-16T17:47:21.215+08:00Inside the world's biggest drain<a href="http://1.bp.blogspot.com/_GtjYDb32EMo/SrC0CG2OHdI/AAAAAAAAAOA/bA4ViyepQ5w/s1600-h/Chinaflag.jpg"><img style="MARGIN: 0px 0px 10px 10px; WIDTH: 143px; FLOAT: right; HEIGHT: 108px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5381999502998511058" border="0" alt="" src="http://1.bp.blogspot.com/_GtjYDb32EMo/SrC0CG2OHdI/AAAAAAAAAOA/bA4ViyepQ5w/s200/Chinaflag.jpg" /></a> 2 recent examples of <strong>Demand Side Policies</strong> in action - both classic examples of how China is using <strong>Fiscal policy</strong> (increased government spending) to increase aggregate demand to keep key macroeconomic objectives such as low unemployment and high economic growth .<br /><br /><br /><ul><br /><li>Click <a href="http://news.bbc.co.uk/2/hi/business/8255326.stm">here</a> to watch a short video : Inside the world's biggest drain</li><br /><li>Click <a href="http://news.bbc.co.uk/1/hi/world/asia-pacific/8256073.stm">here</a> to watch a short video : China's solution to economic woes</li></ul>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-59226599533988339412009-09-05T08:26:00.001+08:002009-09-05T08:27:41.598+08:00The Chinese Economy in 3 minutesGreat summary of the Chinese economy from The Economist<br /><br /><iframe src='http://video.economist.com/linking/index.jsp?skin=oneclip&ehv=http://audiovideo.economist.com/&fr_story=f3d354353479062309d70eee659a757a3ab3d5a3&rf=ev&hl=true' width=402 height=336 scrolling='no' frameborder=0 marginwidth=0 marginheight=0></iframe>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-7587863083899769072009-06-03T15:22:00.003+08:002009-06-03T15:28:25.255+08:00Revealed: the bid to corner world's bluefin tuna market<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_GtjYDb32EMo/SiYllwnDqVI/AAAAAAAAANA/KQ1M7EHO45E/s1600-h/pg-10-fish-getty_180955t.jpg"><img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 200px; height: 136px;" src="http://3.bp.blogspot.com/_GtjYDb32EMo/SiYllwnDqVI/AAAAAAAAANA/KQ1M7EHO45E/s200/pg-10-fish-getty_180955t.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5342999338555779410" /></a><br />Read <a href="http://www.independent.co.uk/environment/nature/revealed-the-bid-to-corner-worlds-bluefin-tuna-market-1695479.html">this link</a>. It is a tragic story that illustrates some basic ideas in economics:<br /><ul><li>Limited resources<br /></li><li>Unlimited wants<br /></li><li>How limited supply increases equilibrium price<br /></li><li>Business not being interested in the social costs of its actions<br /></li></ul><br /><br /><object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/QWB8KJ1aIJ4&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1"><param name="allowFullScreen" value="true"><embed src="http://www.youtube.com/v/QWB8KJ1aIJ4&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-80568290573453862172009-03-17T16:33:00.002+08:002009-03-17T16:36:16.762+08:00UK plans for minimum alcohol price<a href="http://2.bp.blogspot.com/_GtjYDb32EMo/Sb9g3qryqtI/AAAAAAAAAMY/_VNStgBzUdw/s1600-h/bingedrinker.jpg"><img id="BLOGGER_PHOTO_ID_5314072594787510994" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 200px; CURSOR: hand; HEIGHT: 150px" alt="" src="http://2.bp.blogspot.com/_GtjYDb32EMo/Sb9g3qryqtI/AAAAAAAAAMY/_VNStgBzUdw/s200/bingedrinker.jpg" border="0" /></a> <div>Binge Drinking is a term used to describe people who drink too much, too quickly to get drunk as fast as possible. </div><div> </div><div>It has become a big problem in the UK where many people feel that alcohol is now too cheap.<br /><br />This means that people are able to afford to binge drink, which then results in anti-social behaviour and damages their health.<br /><br />Englands chief medical advisor, Sir Liam Donaldson has said that the UK Government should set a minimum price on alcohol. <br /><br />Watch <a href="http://news.bbc.co.uk/2/hi/uk_news/7944463.stm">this BBC video</a> on the idea and then answer the following questions:<br /><br />1) How much does alcohol related illness cost the UK taxpayer each year?<br /><br />2) How would the price of each bottle of wine be calculated?<br /><br />3) If this plan was made law by the UK Government, what estimated percentage change in demand for alcohol is predicted?<br /><br />4) Use a suitable economic theory to explain the effect of a minimum e price on alcohol. Use a suitable diagram to support your explanation.<br /><br />5) Who is in favour of the minimum price, and who is against it?<br /><br />6) Is alcohol Price elastic or price inelastic? Justify your answer based on the information in the video.<br /><br />7) What social costs and social benefits can identify if the plan for a minimum price on alcohol is made into a UK law. </div>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-18716439022983937312009-03-13T08:55:00.001+08:002009-03-19T09:37:22.888+08:00Critic hits out at car scrapping scheme<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_GtjYDb32EMo/SbmuFANbsZI/AAAAAAAAAMQ/HCFCJ0vUw08/s1600-h/car_scrapping.jpg"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 200px; height: 150px;" src="http://3.bp.blogspot.com/_GtjYDb32EMo/SbmuFANbsZI/AAAAAAAAAMQ/HCFCJ0vUw08/s200/car_scrapping.jpg" alt="" id="BLOGGER_PHOTO_ID_5312468636439130514" border="0" /></a><a href="http://news.bbc.co.uk/2/hi/business/7936697.stm">This BBC article</a> looks at a new ‘car scrapping scheme’ from the British Government.<br /><br />The idea has already been tried (successfully??) by the German Government. In it, people who own old, polluting cars are to be offered money by the Government to help them buy new, less polluting cars.<br /><br />Read the article and answer the following questions:<br /><br />1) Briefly explain the idea behind the original German ‘car scrapping scheme’<br />2) What information can you find that suggests that the German ‘car scrapping scheme’ was a success or a failure.<br />3) What economic terms would you use to describe George Monbiot’s argument that the scheme is…<br /><span style="font-style: italic;">“…an expensive way to cut carbon emissions "especially as there is a limited pool of money from the state.</span> <span style="font-style: italic;">Money should be used to the best possible effect if we are trying to reduce the impact on the environment," he says</span>.<br /><br /><span style="font-style: italic;">"And that means as much carbon cut as we can for every pound that we spend." </span><br /><br />4) How could you use this article to describe the TRUE cost of production (hint – define social costs and social benefits)Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-13411348867188339652009-03-12T15:22:00.004+08:002009-03-12T15:31:01.672+08:00What is Quantitative Easing?Two great articles from the BBC on Quantitative easing<span style="font-weight: bold;">:<br /><br /><a href="http://news.bbc.co.uk/1/hi/business/7927137.stm">A cartoon guide to Quantitative Easing</a><br /><br /><a href="http://news.bbc.co.uk/2/hi/business/7936319.stm">Q&A - Quantitative Easing </a><br /><br />Explanation<br /></span><span>The Bank of England is not a high street bank. It is like a money shop that buys and sells money from banks and financial institutions on behalf of the UK Government.<br /><br />It can lower the price of that money by lowering its ‘official bank rate’ (the rate of interest or “price” that the BoE charges for money). This of course makes it cheaper form banks to ‘buy’ money from the BoE.<br /><br />The Government has been lowering the ‘official bank rate’ in the hope that the banks would come in, ‘buy’ the ‘cheap money’, and lend it to customers and business.<br /><br />The customers and businesses would buy products with this ‘cheap money’, which would increase aggregate demand, reduce unemployment and increase the value of products produced in the UK (increase the GDP).<br /><br />However, even at a 300 year low rate of 0.5%, the demand for the ‘cheap money’ has not increased, so the UK Government has now decided to use “Quantitative Easing” to try and get the UK economy out of recession.<br /><br />Quantitative easing is a Government policy which allows the BoE to simply print money, and feed it into the UK economy in special ways – by <br />• Giving some to the Government in return for Government Bonds<br />• Giving some to banks and other financial institutions in return for bank assets<br />• Loaning some to banks and other financial institutions at a low rate of interest.<br /><span style="font-weight: bold;"> </span></span><span style="font-weight: bold;"><br /></span>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-30832809516466015912009-03-01T19:36:00.002+08:002009-03-02T17:23:00.242+08:00Why do we need economic growth?<a href="http://1.bp.blogspot.com/_GtjYDb32EMo/SaulWh5xGmI/AAAAAAAAALo/-Pg2HSSqlQo/s1600-h/econ_growth.jpg"><img id="BLOGGER_PHOTO_ID_5308518392262629986" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; WIDTH: 200px; CURSOR: hand; HEIGHT: 86px" alt="" src="http://1.bp.blogspot.com/_GtjYDb32EMo/SaulWh5xGmI/AAAAAAAAALo/-Pg2HSSqlQo/s200/econ_growth.jpg" border="0" /></a>Read <a href="http://news.bbc.co.uk/2/hi/uk_news/magazine/7674841.stm">this BBC article</a> on the meaning, the advantages and the disadvantages of economic growth. Then answer the following questions:<br /><br />1. Define the terms ‘GDP’ ‘Recession’ and ‘Inflation’ (use my glossary definition please!)<br />2. Explain why the figures (for calculating GDP) need to be corrected for inflation?<br />3. Explain the importance of using a base year (e.g. 2003) are used in the calculation of GDP<br />4. Why is spending ‘the crucial factor affecting growth’<br />5. Explain why the current economic situation may lead to a ‘recipe for recession’<br />6. What is the key to sustained economic growth in an economy? Why might inflation increase if ‘we spend beyond the capacity for an economy to produce?’<br />7. Identify 2 things that can happen to an economy if growth disappears and recession looms’<br />8. Explain why economic growth is important to reduce poverty in a country.<br />9. Explain 3 possible problems with economic growth.Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-58610918622819185522009-02-25T18:23:00.005+08:002009-03-23T10:29:55.717+08:00Hong Kong Government Expects Further GDP Contraction<a href="http://4.bp.blogspot.com/_GtjYDb32EMo/SaUkm88x-PI/AAAAAAAAALg/7qAn_PFKUrk/s1600-h/tsang.jpg"><img id="BLOGGER_PHOTO_ID_5306687987540687090" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 74px; CURSOR: hand; HEIGHT: 98px" alt="" src="http://4.bp.blogspot.com/_GtjYDb32EMo/SaUkm88x-PI/AAAAAAAAALg/7qAn_PFKUrk/s200/tsang.jpg" border="0" /></a>More bad economic news ...sorry!<br /><br />Read <a href="http://online.wsj.com/article/SB123553829905167971.html">this WSJ article </a>on the latest Hong Kong Government budget and then answer the following questions.<br /><br /><br />1) Define GDP and Recession<br />2) Who is John Tsang, and what does he do?<br />3) Fill in the gaps: <em>A Government budget is a financial plan published by a Government. It shows the expected Government revenue (that is - money the Government expects to get from its working citizens who pay _______) and Government _________ (that is – details how the Government plans to spend money on _______ sector work such as public education, and health).</em><br /><em></em><br /><em>Each year, the Hong Kong Government creates a new budget to cover the period from _______ to ________)</em><br /><br />4) Why do you think that the Hong Kong Government plans to reduce its annual spending from US$38.66 to US 30.16 billion dollars?<br />5) Why are some people critical of the budget?<br />6) <em>Mr. Tsang said his spending plans, including up to HK$39.3 billion on capital works, will boost domestic demand and create jobs. </em>Use a suitable diagram to explain the planned impact on local jobs.<br />7) The Government plans to issue something called <em>‘sovereign debt’</em>. What do you think it is, and why do you think it is needed?<br />8) What are 'externalities'? Briefly explain 2 reasons why Mr Tsang has chosen to increase the level of tax on cigarettes.Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-49691508227001320382009-02-13T10:35:00.003+08:002009-02-13T10:39:50.621+08:00Opec: The oil cartel in profile<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://newsimg.bbc.co.uk/media/images/44698000/jpg/_44698734_opec_ap_226b.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 226px; height: 170px;" src="http://newsimg.bbc.co.uk/media/images/44698000/jpg/_44698734_opec_ap_226b.jpg" border="0" alt="" /></a><br /><a href="http://news.bbc.co.uk/2/hi/business/3768971.stm">Another good BBC article</a> on OPEC - the Oil cartel. Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-70957926095927685792009-02-11T10:37:00.005+08:002009-02-11T17:48:32.985+08:00Is the US heading for a depression?<img style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 240px; CURSOR: hand; HEIGHT: 120px" alt="" src="http://newsimg.bbc.co.uk/media/images/45429000/jpg/_45429709_us_rec_466.jpg" border="0" />Here is <a href="http://news.bbc.co.uk/2/hi/business/7860965.stm">another depressing article</a> on the state of the US economy (sorry!).<br /><br />Read it, and then answer the following questions<br /><strong></strong><br /><strong></strong><br /><strong>Paragraph 1- Businesses hit</strong><br />1a) What is the generally accepted definition of the word recession?<br />1b) Use the graph to identify when the US economy entered a recession?<br />1c) In the first paragraph, which industries are mentioned as having falling sales? As an economist, what do these industries have in common?<br /><br /><strong>Paragraph 2- Businesses hit<br /></strong>2a) Identify one key macroeconomic objective that has been damaged by the recession?<br />2b) Identify 4 factors that have occurred as a result of the recession<br /><br /><br /><strong>Paragraph 3 - Consumers save</strong><br />3) Construct aggregate demand and supply curves based on the information in this paragraph<br /><br /><strong>Paragraph 4 - Government rescue?<br /></strong>4a) Explain how the US Government has decided to tackle the current recession?<br />4b) What problems are mentioned that may limit the effectiveness of their actions?<br /><br /><strong>Paragraph 5 – Financial Squeeze<br /></strong>5a) Explain what the term ‘toxic debt’ means.<br />5b) How much toxic debt has been reported?<br />5c) What can you say about the accuracy of this figure?<br /><br /><embed pluginspage="http://www.macromedia.com/go/getflashplayer" src="http://www.odeo.com/flash/audio_player_standard_gray.swf" width="300" height="52" type="application/x-shockwave-flash" quality="high" allowscriptaccess="always" wmode="transparent" flashvars="valid_sample_rate=true&external_url= http://highschool.dragonpride.org/moodle/file.php?file=/1/Podcasts/Econ_01.mp3"></embed>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-17896414276348074302009-02-01T17:45:00.000+08:002009-02-04T08:18:22.942+08:00World growth 'worst for 60 years'<a href="http://2.bp.blogspot.com/_GtjYDb32EMo/SYVvzpS0OWI/AAAAAAAAAJc/4bS2tltwrx0/s1600-h/recession1.jpg"><img id="BLOGGER_PHOTO_ID_5297763469720041826" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; WIDTH: 200px; CURSOR: hand; HEIGHT: 150px" alt="" src="http://2.bp.blogspot.com/_GtjYDb32EMo/SYVvzpS0OWI/AAAAAAAAAJc/4bS2tltwrx0/s200/recession1.jpg" border="0" /></a> <div>Read <a href="http://news.bbc.co.uk/2/hi/business/7856020.stm">this BBC article</a>, and answer the questions:</div><br />1) How do economics measure economic growth?<br /><br />2) The article says that the UK recently entered a recession. What does the word ‘recession’ mean?<br /><br />3)What data in the 1st paragraph can you find to support the belief that the world economic situation is getting worse rapidly?<br /><br />3) What is ‘protectionism”. Based on what you know of global trade , do you agree or disagree with the director of the World Trade Organisation that protectionism would be "<em>a big mistake</em>".<br /><br />4) What does the ILO predict will happen to unemployment as a result of the current economic crisis? Explain briefly why the article says that unemployment is likely to increase in 2009?<br /><br />5) What does the article predict for the world economy over the next 2 to 3 years?<br /><br />6) Explain what a ‘bad bank’ isMartin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-61095040672773360492009-02-01T17:32:00.000+08:002009-02-01T17:39:15.662+08:00Why is US unemployment rising?<a href="http://1.bp.blogspot.com/_GtjYDb32EMo/SYVskBA5_oI/AAAAAAAAAJU/ojfU6JrqT-o/s1600-h/unemployed.bmp"><img id="BLOGGER_PHOTO_ID_5297759902674583170" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 200px; CURSOR: hand; HEIGHT: 112px" alt="" src="http://1.bp.blogspot.com/_GtjYDb32EMo/SYVskBA5_oI/AAAAAAAAAJU/ojfU6JrqT-o/s200/unemployed.bmp" border="0" /></a> <div>Read <a href="http://news.bbc.co.uk/2/hi/business/7820128.stm">this BBC article</a> and answer the following questions:<br /><br />1) What is unemployment, and what is the current US unemployment rate?<br />2) According to the article, what factors are causing unemployment to increase in the US?<br />3) Why can US businesses cut their workforce quicker than European businesses?<br />4) Explain what is meant by the phrase “unemployment is a lagging indicator”<br />5) Which US sectors are currently losing workers?<br />6) Describe how the US Government plans to reduce unemployment </div><br /><div></div>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-62933232833019745032009-01-18T20:03:00.000+08:002009-01-18T20:06:16.033+08:00Go-ahead for new Heathrow runway<a href="http://4.bp.blogspot.com/_GtjYDb32EMo/SXMa5euJGrI/AAAAAAAAAJE/QNu5OAoaj_4/s1600-h/heathrow.jpg"><img id="BLOGGER_PHOTO_ID_5292603561891928754" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; WIDTH: 89px; CURSOR: hand; HEIGHT: 67px" alt="" src="http://4.bp.blogspot.com/_GtjYDb32EMo/SXMa5euJGrI/AAAAAAAAAJE/QNu5OAoaj_4/s200/heathrow.jpg" border="0" /></a>This <a href="http://news.bbc.co.uk/2/hi/uk_news/7828694.stm">BBC article</a> covers the recent decision by the British Government to allow a 3rd runway at the London’s Heathrow airport – the world’s busiest airport. This article is a good example of how economists measure the true cost of production.<br /><br />1) What are private costs and private benefits? What are the private costs and private benefits in creating a 3rd runway?<br /><br />2) What are external costs and external benefits? Which external costs and external benefits can you see in this article?<br /><br />3) Based on your findings – should the 3rd runway be built (hint – have you identified all social costs and social benefits in the article?)Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-56393348683223755702009-01-11T13:17:00.000+08:002009-01-11T13:25:24.386+08:00UK Interest rates hit all-time low<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://newsimg.bbc.co.uk/media/images/45356000/gif/_45356807_bank_rates_1951_09.gif"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 399px; height: 239px;" src="http://newsimg.bbc.co.uk/media/images/45356000/gif/_45356807_bank_rates_1951_09.gif" alt="" border="0" /></a><br />This BBC article has some interesting data on the latest UK economic situation. Read it and answer the following questions:<br /><br />1) Is an interest rate cut an example of fiscal or monetary policy?<br /><br />2) Explain briefly what the Bank Of England aims to achieve by lowering the interest rate?<br /><br />3) Based on the evidence if the article – do you think that cutting interest rates will achieve the aims of the Government?<br /><br />4) Why do you think that the UK Pound appreciated against the Euro after the cut in interest rates?<br /><br />5) Explain the term ‘quantitative easing’Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-36424983659091263532009-01-03T09:22:00.000+08:002009-01-03T09:27:28.974+08:00Why are things getting so cheap?This <a href="http://www.guardian.co.uk/business/2009/jan/03/deflation-cheap-pound-goods-consumers">nice short article </a>from the Guardian covers the latest on UK inflation and the threat of deflation.Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-89360441936671553812008-12-18T07:35:00.000+08:002008-12-18T07:41:05.095+08:00Opec agrees record oil output cut<a href="http://3.bp.blogspot.com/_GtjYDb32EMo/SUmN_PuXyFI/AAAAAAAAAIc/9WmRL8qSKFE/s1600-h/oil_2008.gif"><img id="BLOGGER_PHOTO_ID_5280908155760920658" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 180px; CURSOR: hand; HEIGHT: 200px" alt="" src="http://3.bp.blogspot.com/_GtjYDb32EMo/SUmN_PuXyFI/AAAAAAAAAIc/9WmRL8qSKFE/s200/oil_2008.gif" border="0" /></a>This BBC article covers yesterdays announcement by OPEC that its cartel will cut its supply of oil by 2.2 million barrels per day starting in January 2009.<br /><br />This decision has been made to try and increase the price of oil from its current price of under $50 per barrel. (Remember that oil was priced at nearly $150 per barrel just 6 months ago in July 2008!)<br /><br />Q) Read the article and explain why, despite the announcement, the price of oil fell to under $40 per barrel yesterday.<br /><br /><a href="http://news.bbc.co.uk/2/hi/business/7786456.stm"></a>Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0tag:blogger.com,1999:blog-7254018224122058198.post-23306597174037573782008-12-18T07:24:00.000+08:002008-12-18T07:29:03.424+08:00Q&A: Volatile oil prices<img style="WIDTH: 148px; HEIGHT: 107px" alt="Barrels of oil" hspace="0" src="http://newsimg.bbc.co.uk/media/images/44699000/jpg/_44699662_barrels_other_226i.jpg" width="226" align="right" border="0" /><a href="http://news.bbc.co.uk/2/hi/business/7425489.stm">This BBC article</a> on the price of oil is food because it gives some interesting details on how the price of oil is really decided.<br /><br />1) Identify the factors that caused the price of oil to increase to over $147 per barrel in July that are mentioned in the 2nd paragraph “<em>Why did oil prices soar to such high levels</em>?”<br /><br /><br />2) Identify the factors that caused the price of oil to fall more than $100 per barrel since July that are mentioned in the 3rd paragraph “<em>So what made it fall again so quickly?</em>”<br /><br />3) Look at the 4th paragraph “<em>That all sounds pretty simple then</em> “ and explain what other factors have an effect on the price of oil.<br /><br />4) Explain why is oil different from other commodities? – look at paragraph 5 “<em>But other than that it's just like any other commodity</em>?”<br /><br />5) Look at the 6th paragraph “<em>So what part do speculators have to play in all this</em>?” to explain the effect that speculators have on the price of oil<br /><br />7) Finally read the 7th paragraph “<em>What sort of factors?</em>” to explain how other factors are often suggested as causes for changes in oil prices.Martin Hartnetthttp://www.blogger.com/profile/13295547690529607807noreply@blogger.com0