Change in Currency

Lately in class, we've been learning about foreign exchange of currency. I was lucky enough to visit Europe this past summer. My family and I went to France, Italy, and spent a day in Germany on our way home. We had such an amazing time, but there was one hassle. When we arrived in Europe, we had to convert all our American dollars into euros. This represented an increase in our demand for foreign currency. To be honest, my dad took care of the money situation, but I can imagine it wasn't easy. I'm not really sure exactly what the conversion ratio was, but I know it took more than one dollar to get a euro. It was definitely harder to find reasonable prices for meals, clothes, etc. in Europe because what may have been reasonable to them was not reasonable to us, due to the fact that we had to pay more to get equal to one euro. My dad was constantly stopping at ATMs to deposit his cash and get more euros. He actually got an excess of euros so we wouldn't run out. When we arrived back in the United States, we had extra euros that we obviously couldn't use anymore. So, he went back to the bank near our house and traded the extra euros for the equivalent amount of American dollars. This left our American bank with an increase in their supply of euros. Maybe next time the United States wants to import something from Europe, they'll use that extra supply of euros my dad gave the bank.

Being a Keynesian

Although it's hard to completely identify with just one of the economic views we've recently learned about, I've come to the conclusion that I'm probably more of a Keynesian. I agree with the Keynesian view that aggregate demand is unstable, even without changes in the money supply. They say this is due to changes in investment spending, as illustrated in the equation C+I+X+G=GDP. To me, it only makes sense that aggregate demand would be determined by the spending of the consumers, the ones who create demand in the first place. Changes in aggregate demand, according to Keynesian economists, affects output and unemployment. I agree with this view because as demand increases, productivity and, therefore, output would logically increase. Along with the increase in output would come a rise in employment because more workers would be needed to meet the new output levels. Keynesians also believe that significant increases and declines in investment spending are the causes of demand-pull inflation and recessions and require government monetary and fiscal policies to correct them. I definitely think that we do need assistance from the government in stabilizing the economy and that it doesn't just self-correct. Finally, I agree with the idea that consumers aren't always rational when making purchases, as described by the term "animal spirits". Overall, I tend to side more with the Keynesian (and mainstream) view of economics.

The Marginal Benefits of Taking a Sick Day

Tomorrow, Thursday, December 5th, 2013, I will not be at school. I have a scheduled visit to the University of Illinois at Urbana-Champaign. Typically, when a student knows in advance that he/she is missing school to go on a college visit, he/she gets a pre-excusal so they're not counted as absent. Each student is given two college visit days per year as upperclassmen, which won't be counted as a missed day of school as long as they fill out and turn in the appropriate paperwork. I, however, have made the economic decision not to get a pre-excusal and to instead just call in sick and be counted absent tomorrow. My reason for this is that second semester, seniors can't miss more than five days of school, otherwise they have to take finals. The way I look at it, I'll already be missing one day for senior ditch day, and there's a chance I could either be sick or have a family emergency or something else that could cause me to miss school. I also have dance competitions second semester, and if I have to compete on a Friday, I'll likely have to miss school. (Or if I'm really tired on a Monday after a competition and I didn't have time for my homework over the weekend, I most likely won't want to attend school that day.) There's no way I'm taking finals next semester; I will do everything possible to make sure I don't have to. But I want to have as many possible days off as I can, just in case I need them. So, I have decided to save these college visit days for second semester, although I might use them for other reasons besides actually visiting colleges. For this reason, the marginal benefits of saving my pre-excused college visit days for next semester outweigh the marginal costs of being counted absent tomorrow.

How the iPad Has Helped Us Learn

This is my second year using a school-issued iPad, and I have to say, I love it. Since I first started using an iPad for learning purposes, I've become familiar with many apps, including notability, schoology, educreations, flipboard, nearpod, flashcardlet, and many more. These apps have greatly enriched the curriculum for the classes they've been selected for. Notability, for example, is perfect for note taking, organizing, completing assignments, and even starting rough drafts for papers. What I love about an app like this is that it's like a huge folder that I can divide up into different subjects. I'm not the most organized person, so this really helps me out because I don't have to keep track of a million papers; they're all together on my iPad. Other apps, like schoology and flipboard, are helpful because you can observe things that other students and teachers post. We even access most our assignments on schoology. I consider apps such as educreations, nearpod, and flashcardlet excellent study/practice tools. I use flashcardlet to study my AP Bio terms every week, which is so convenient because I don't have to worry about carrying around a bunch of little notecards. Nearpod is often used to have interactive presentations in classes, where teachers design the slides to have questions on them and students can type and submit an answer. Educreations is also a great app to learn from because you can type, draw, insert pictures, and create an audio recording to go along with it all. It's like a much cooler and more improved version of a PowerPoint presentation. It helps me understand material so much better when I can write or draw it out and explain it in words with an app like that. Those are just a few of the amazing apps I regularly use on my iPad. They continue to prove very useful in my comprehension of material and ability to be prepared and organized for classes.

Open Market Operations

http://www.investopedia.com/ask/answers/06/openmarketoperations.asp
This article about open market operations is such a great connection to what we've learned in class. It goes into depth about each of the two open market operations, and clearly shows the connection between changes in aspects of the economy, like money supply, interest rates, investment, and inflation, due to the effects of these policies. Just like we discussed in class, the article pointed out that the Federal Reserve System (specifically the Federal Open Market Committee) is responsible for the control of money supply and, therefore, inflation, by putting these policies into action. The article distinguished between buying securities to increase the money supply (expansionary) and selling securities to decrease the money supply (contractionary) and even mentioned that the securities used in open market operations are Treasury bills, bonds, and notes, just as we learned. Something the article really helped my understanding of was the effect the policies have on the amount of lending money banks have. We had already covered that concept this chapter, but reading this article even furthered my comprehension of the topic. In my opinion, articles like this one are really useful studying tools because they reiterate the material we've learned in class and from reading the chapters in our textbooks, and sometimes they present ideas in ways that might be easier for us to understand. Plus, repetition of the concepts can never hurt.

Janet Yellen to be Next Chairwoman

President Obama has nominated Janet Yellen to become chairwoman of the Federal Reserve, replacing the current chairman, Ben Bernanke, as he retires. This decision has created a lot of controversy among U.S. citizens, but I happen to support it. First off, Yellen is very well-educated; she completed her undergraduate studies at Brown Univeristy and received her PhD from Yale University. She has worked hard to become qualified for this job, through being an economic advisor to Bill Clinton, being President of the Federal Reserve in San Fransisco, and currently working as vice chair of the United States Federal Reserve, alongside Ben Bernanke. Besides being qualified, I believe she would make a good chairwoman because she plans to continue with the Fed's current policies of improving employment rates while controlling inflation, which are low-interest-rate policies. These policies have definitely helped the economy already, and they would only continue to help by her enforcement of them. She also addresses possible issues in the economy, like future inflation or the continuation of monetary stimulus policies for too long, and devises plans to handle those situations. In my opinion, Janet Yellen has more than enough experience and wisdom to efficiently take on the title of chairwoman of the Federal Reserve, and will make helpful decisions concerning the future of our economy.

The Political Business Cycle

Everyone knows that politics is just about the most corrupt career field out there. Between the lying, taking bribes, cheating, and all the other dishonest behaviors they practice, it's hard to be more unethical than politicians. To add to everything they already do wrong, a lot of them are guilty of participating in the political business cycle. This means that they make inappropriate decisions for the stabilization of the government around election time in order to be more popular among the voters and increase their chances of winning the election. The political business cycle has proven to be a true problem in the history of politics. For example, before the election of 1940, President Franklin D. Roosevelt made a speech in which he promised America that he would keep all soldiers out of war and keep peace in the nation. Apparently, this wasn't the best decision at the time because once he was reelected, he broke his promise and sent the soldiers to war. He had only made that promise to the U.S. citizens because he knew that's what they wanted to hear and that's what would earn their votes. While this did ultimately help him win the election, it was clearly a very immoral thing to do. Politicians will most likely continue to take part in the political business cycle, among other wrongful things, forever, which will affect the economy negatively everytime it's practiced.

Savings Over Income

It's ironic how we learn things in school and then afterwards realize that we had been observing that very concept all along. That happened to me this week when I was studying and thinking about the formulas for the average propensity to save and the marginal propensity to save. Unbeknownst to me, my dad regularly calculates the APS and MPS of the money we share among our family. After discussing it in more detail with him, I learned that he finds our APS about every month to make sure we're continuously saving enough of our income to put toward college, family vacations, retirement funds, etc. Depending on the resulting percentage, he then adjusts our level of savings accordingly. He also measures the MPS of our income annually and compares the change in the percentage of income were saving between years. This is really important for him to do because his salary changes every year, partly due to the fluctuation in the amount of money his boss gives him as a bonus. As his salary changes year by year, the amount of our income that were saving should change too. After calculating the MPS, he knows how much he needs to save for the next year. By doing this, he ensures that we save the appropriate amount of our family income to continue living in the conditions that we currently live in and to create important funds and make progress in paying off investments and loans.

People Get Their Jobs Back!

As of tonight, Wednesday, October 16th, 2013, Congress finally approved a bill to temporarily reopen federal agencies, meaning that federal workers who had been out of work due to the government shutdown can plan on going back to their jobs tomorrow. This budget compromise is also allowing the Treasury to continue borrowing money to pay our nation's debt. We should consider ourselves very lucky that Congress has come to this agreement because not only is it giving people their jobs back, but it's preventing the possibility of a default that would have been very detrimental to our economy. Our country has enough debt as it is, and if we went into that default, we would just be falling into more and more debt. In fact, it's likely that this default would have put us in another recession and overall be completely disastrous economically. In order to try to prevent this type of situation from arising again, this deal requires a panel made of members from the House of Representatives and the Senate to come together and try to think of long-term deficit-reduction ideas to be approved by the whole Congress. They should have these ideas put together by December 13th, so we can hopefully expect a new year free of government shutdowns. It's nice to see that the government has finally helped U.S. citizens and reached somewhat of a compromise, enough to return workers to their jobs.

The Flaws of GDP

In my opinion, GDP is not the best possible measure of our nation's well-being. It excludes some factors that are necessary to calculate an accurate measure. For instance, it doesn't include the value of stay-at-home parents. Even though they don't affect the economy in terms of actual money, they sacrifice their time to help their families, and their hard work should be accounted for. Something else that is excluded from GDP is the satisfaction or lack therof that the consumers have after using a product or service. Basically, it completely ignores the emotional value of any and all goods and services. Also, perhaps one of the most important exclusions of GDP is the black market. Although the government likes to pretend it's nonexistent, the black market is real and a lot of illegal transactions take place in it that are not calculated along with GDP. Besides just illegal transactions, there are illegal immigrants in our country who purchase things and are not accounted for. Between all the illegal activity going on in the United States, there's a lot of economic productivity that the GDP doesn't cover. Another factor I thought of that isn't included in GDP is the increasing or diminishing value of second hand sales. If someone buys a house, GDP doesn't account for possible loans or debt the consumer might face down the road. Overall, it seems like GDP is a decent measure of our economic well-being, but it is definitely an understatement of our actual economy and could be improved to produce more accurate calculations.

Government Shutdown

One of the most controversial topics in discussion among Americans right now is the government shutdown. The cause for this decision to temporarily shut down the government was a disagreement between the House and Senate about a bill to pass that would subsidize the government for Obamacare (also known as the Affordable Healthcare Act). While I can see the validity of both sides of the argument and understand the reason for the disagreement, I don't believe a shutdown is the way to handle it. This shutdown is temporarily putting many people out of work and withholding their pay, while Congress, who proposed the idea of the shutdown, continues to receive pay despite the cut off of several federal services. Besides that, the shutdown is also very inconvenient for the American people, whose best interest the government claims they keep in mind. Some of the services that are being shutdown are ones that are in high demand by the citizens of the United States. For example, no one can get a passport until the government is fully operating again, which is upsetting to a lot of people. Another very important consequence of this shutdown to consider is the amount of debt it's adding and the long-term economic damages it will do. We have enough debt as it is; the last thing we need is to keep adding billions of more dollars to it. I know it's easier said than done, but the Democrats and Republicans who represent the Senate and House, respectively, need to either reach a compromise in regards to the bill for funding Obamacare, or they need to find another way to deal with their differences in opinion and keep the government in operation until they make their final decision because this shutdown is proving detrimental to our country and economy.

Positive and Negative Externalities

After learning so much about externalities in class lately, I've realized that probably the majority of things we do and choices we make can be classified as either a positive or negative externality. I've even started noticing how my actions could be categorized and I've become more conscious of what I do and how it affects others. The other day, for example, I took my dog for a walk. While on the walk, my dog had to go to the bathroom and I cleaned up after him so I wouldn't step in it. This served as a positive externality because after I cleaned up after my dog, no one else had to run the risk of stepping in it or even smelling it when they passed that spot either, so what I did to help myself helped others as well. On the opposite end, I was guilty of producing a negative externality while driving to dance last week. I had to have my hair up in a tight bun for the ballet class I was going to, and I hadn't had time to do my hair before I left my house, so I decided to do it in the car. So, I worked on my hair at stoplights, and therefore wasn't paying complete attention when the light turned green. Since it took me a few moments longer to notice when the light changed, the cars behind me had to wait until I saw the light and started accelerating. Although it was beneficial to me to get my hair done, it was inconvenient for the cars who were forced to wait for me. Thinking about this now, I feel really bad for creating a negative externality like that. Learning about an economic concept like that has made me give more consideration to my actions and try harder to not inconvenience others with my own actions.

Supply and Demand

This week in economics, we've been focusing on the concept of supply and demand. The supply and demand different goods and services are constantly changing. Ever since we started learning about supply and demand, I've been more aware of the prevalent supply and demand changes all around me. For instance, there are two McDonald's locations close to my house. I noticed that one of the McDonald's increased the price of their ice cream cones, while the other McDonald's maintained their price of ice cream cones, which was lower than the new price of the first McDonald's. The two McDonald's locations act as substitutes, and because the price of the ice cream cones at the first McDonald's increased, the demand for those ice cream cones decreased, and my family (and probably other people) used the substitute of the other McDonald's, so the demand for their ice cream cones increased. I also observed a shift in the supply of a product recently. A lot of Conant students are part of the fan section at sporting events, called the "Cougar Crazies" and every year, the leaders of the Cougar Crazies order t-shirts for anybody who says they want one. This year, the leaders ordered a set amount of personally designed t-shirts for those of us in the Cougar Crazies. However, after the t-shirts arrived and we actually got them, a lot more students went to the leaders and said that they wanted shirts too. The leaders hadn't accounted for extra people who may want shirts, so their expectations were lower than the outcome. Therefore, they had more shirts made, and the supply of those t-shirts increased. These were just two simple examples of changes in supply and demand, but they show how many things that we see everyday can relate to economics.

President Obama's Position on Syria

On Tuesday, September 10th, 2013, President Barack Obama delivered a fifteen-minute, nationally televised speech, in which he stated his position on the crisis in Syria. In short, he has made the decision that the United States is going to respond to the attacks in Syria with a "targeted military strike" in an effort to end their use of chemical weapons. While many US citizens are skeptical about the President's plan, I happen to agree with it. Throughout his speech, he continuously referred to the idea of the US helping out other countries, even if it's not necessary. A lot of people are upset over that very idea because they feel that this isn't our country's place to get involved. I can see why they would think that we shouldn't get involved in something that doesn't concern us, but that's just it; it should concern us. Anytime there's something we can do to help others, no matter what country they're from, we should do it. I want peace just as much, if not more, than the next person, but I don't think it would be right to ignore a problem that we're aware of. For as much pride and integrity as our nation has, I think it's almost expected for us to step up and help those less fortunate than us. We can't just sit back and let innocent people continue to be tortured and killed by gas and other chemicals. President Obama is right; we need to at least try to help Syria because, even though we live in different countries, we all live in the same world, and we all want to live healthy and happy lives.

Opportunity Cost In Everyday Life

Everyday we are forced to make decisions and deal with opportunity cost, which is what must be sacrificed in order to get what we want. Whether it's a big, important decision or a small one, we are constantly faced with situations in which we have to choose one option. Earlier today I was driving to school when I realized that I had forgotten my parking pass at home. The parking spots in second lot usually fill up pretty early in the morning so I knew that I couldn't park there, which meant I had two options. I could either turn around and drive back home to get my pass, or I could go to school without it and risk getting a parking ticket. After weighing the options, I eventually decided to turn around and go home to get my pass. Even though it cost me extra time to drive home and then back to school, it saved me from having to pay a fine for parking without a pass and saving the money was ultimately my biggest priority in that situation. I had to make the same type of decision earlier this week when my dance teacher got sick and asked me if I could substitute teach for her classes for four hours. This was my only week off of dance and I had a lot of homework that night so I was tempted to ask someone else to take over, but she also said she would pay me sixty dollars for subbing. When it came down to it, I decided to teach the classes, do my homework when I got home, and sacrifice some of my sleep for that night. Even though that wasn't what I really wanted to, the sixty dollars I got from teaching was more important to me than my sleep. These are the kinds of choices I make on a daily basis. Things like opportunity cost and making economic decisions show how prevalent economics is in our everyday lives.