Ten Key Principles of Economics

1. Everything has a cost. There is no free lunch. There is always a trade-off.
2. Cost is what you give up to get something. In particular, opportunity cost is cost of the tradeoff.
3. One More. Rational people make decisions on the basis of the cost of one more unit (of consumption, of investment, of labor hour, etc.).
4. Incentives work. People respond to incentives.
5. Open for trade. Trade can make all parties better off.
6. Markets Rock! Usually, markets are the best way to allocate scarce resources between producers and consumers.
7. Intervention in free markets is sometimes needed. (But watch out for the law of unintended effects!)
8. Concentrate on productivity. A country’s standard of living depends on how productive its economy is.
9. Sloshing in money leads to higher prices. Inflation is caused by excessive money supply.!!
10. Caution: In the short run, falling prices may lead to unemployment, and rising employment may lead to inflation.



Saturday, October 30, 2010

Americans Are Misinformed When It Comes To The Economy

The link takes you to an article declaring the misinformation that is rife in America today. Most of our citizens carry inaccurate opinions on the status of the Economy and the government's finances. This is disheartening since they are about to make some pretty important decisions.

1. What does the reader believe to be the single biggest reason for this level of misinformation in our society today? Explain.

2. Why might it be easy to understand that, faced with the facts, individual households could still be skeptical about the macro realities?

3. If these represent the opinions Americans are taking to the polls, what impact will this have on Tuesday's election and the coming years in our national and state Capitols?

4. Can you make a connection, as students, between the disintegration of objective media, the rise of polarizing and uncivil relations in our politics, the disappearance of well-guided public education, and this level of misdirection among the electorate?

Tuesday, October 26, 2010

How to Restore the American Dream

How to Restore the American Dream

U.S. Falls Out Of The Top 20 On The World Corruption List

For the first time in the history of this index, the U.S. has been recognized for a deteriorating climate of legitimacy. The recent banking crisis and the Bernie Madoff revelation have led to an increased capacity for corruption in the country. The rule of law and a presumed fairness in the system are essential for a progressive economy.

Monday, October 18, 2010

Why It Doesn't Feel Like A Recovery

This a terrific article with over-laying diagrams that explains why the economy doesn't feel like it's in recovery mode. The graphs display the difference between potential output and actual output, and how long it will take the economy to recover based on different growth levels.

Saturday, October 16, 2010

The Wealthy May Pay Higher Taxes But Work Less

The article describes the full impact higher taxes may have on those making more than $250,000. The author relates this increase to his own life and admits that he make work less in the future. Not only will his nominal income be tapped but also the future income of his heirs.

Tuesday, October 5, 2010

The Importance Of Being Banked

This article offers insight into the cost of living on the Economy's fringe. The disassociation with traditional banking services can cost an extreme amount of money to those who can least afford it.

Monday, October 4, 2010

Vote Easy / Vote Smart


Click on the title above and you'll be taken to a pretty slick interactive that will introduce you to the candidates on your ballot and match their preferences to your own. The device covers twelve topics and matches the views of the hopefuls with the positions you establish through simple questions.