Harmeets Econ Blog

Reflection

harecon — Mon, 04 Apr 2011 07:23:10 +0000

Mocks:
My mocks results was very anti-climactic. I thought I would do better, but the amount of studying I did, a mid four was expected. This mock made it clear that I need a better grasp of graphs, I lost some very easy points by not having the correct lines intersect at the right places. This was seen through the monopoly curve I drew in my graph where the MC line did not intersect with the AC. More easy points was lost because of lack of motivation. When I saw YED in my study guide I skipped over it because I assumed I knew it, and to be fair in the time I gave myself to study I was probably right to skip over it. Unfortunately it came back to haunt me during the mocks.

Study Plan:
Econ is probably one of my few clases (along with biology and math) that I will put most of my focus on. Out of all my classes these were the weakest, and economics by a big margin. What really surprised me with my mock is that I went into the exam with a lot of my doubts cleared up. Come exam time however it was my best (or previously best) topics that came back and hurt me. I think this mock exam was good for me, I feel much more motivated to do better. I will continue to use my OSC book, as well as look at the power points you give us for the graphs. I bought a whiteboard just to help me practice the graphs in economics. I find it hard to allocate an hour a day to economics, and even in class it can be challenging to remain focused. I may try going to the library away from distractions.

Microeconomics Summary Part 2: Supply and Elasticity

harecon — Sat, 19 Feb 2011 12:49:01 +0000

Supply- Quantity of Goods and services that will be supplied to the market at various prices at different periods of time.

Supply is determined by

- Price

-COP

-Prices of other products

-Taxes and Subsidies

-Technological Progress

-Weather

A change in the price will result in a movement along the price curve

A change in any other factor will cause the supply curve to shift

Maximum Price-
Set by the government when they feel that the price of a good is too high

Elasticity-
Price Elasticity of demand

Def- Measure of the responsiveness of the demand for a product to the change of price

0- Perfectly Inelastic

Under 1- inelastic

1- Unitary

Over 1- Elastic

Infinity- Perfectly elastic

Cross Elasticity of Demand

Measure of the responsiveness of demand for one product to the change in the price of another product

Value

0- perfectly inelastic

Undr 1- inelastic

1- Unitary

Over 1 Elastic

Infinity- Perfectly Elastic

Income Elasticity of Demand

Microeconomics Summary part 1: Markets

harecon — Wed, 16 Feb 2011 15:00:44 +0000

Markets- A market is any effective arrangement that brings buyers and sellers together, (not necessarily face to face). In a market it is always assumed that the producers and consumers act rationally. There are two types of markets, the market for consumer goods, and a market for consumer services. There are different types of market structures, Perfect competition, Monopoly, Monopolistic competition and Oligopoly.

Monopoly-When there is only one producer in a particular market (I.E Comcast being the only cable provider in certain areas of the US)

Perfect competition – Many competitors who produce the same product and the market decides the price (I.E soft drinks) It is ideal (not real can not exist)

Monopolistic competition -Cross between competition and monopoly. Here firms have competitors but they are producing different types of products

Oligopoly- here there is just a few competitors and there is interdependence between the firms. The markets rely on non price competition such as after-service sales.

Demand:
Demand- Quantity of a good or service that would be bought at each and every price over a period of time. Thus it means that there is a willingness to pay for a product, a desire to pay for a product and an ability to pay for a product. Without these three factors it is not demand

Law of Demand: The law of demand states that the consumers acts in a rational manner, thus higher the price the lower the demand.

Determinants of Demand-

Price

Price of other goods

Reas disposable income

Availability of credit

Expectations of Price change

Taste

Adverts

Season

Population

Madagascar

harecon — Tue, 01 Feb 2011 06:17:41 +0000

To be clear this post is about the country, not the movie. (hahaha)… No seriously Madagascar a terrible place with famine and diseases. Madagascars GDP per capita is less than $1000 dollars per capita. (according to wikipedia). That is less than $1 per person! The population of Madagascar is a surprisingly low 19.6 low million people. There is nabout 37.3% of their people are unemployed. Their dependence data is unknown

Madagascar

harecon — Tue, 01 Feb 2011 06:17:39 +0000

To be clear this post is about the country, not the movie. (hahaha)… No seriously Madagascar a terrible place with famine and diseases. Madagascars GDP per capita is less than $1000 dollars per capita. (according to wikipedia). That is less than $1 per person! The population of Madagascar is a surprisingly low 19.6 low million people. There is no known data for their unemployment, and dependence

Explain the various factors which may affect an exchange rate in a floating exchange rate

harecon — Thu, 20 Jan 2011 03:35:27 +0000

A floating exchange system is when the fate of the currency is determined by market forces such as supply and demand. Currencies in a floating exchange system can either appreciate or depreciate. Appreciation is when a floating exchange system increases in value in terms of another currency. Depreciation is when a currency decreases in value in terms of another currency. The shifts in the market forces (Supply and Demand) is determined by various different factors.
One of these factors is exports and imports. As a rule, demands of a countries export is directly proportional to the demand of the currency. (Nations can not buy exports with domestic currencies). For example, the demand of the Australian Dollar is high because it has a lot of commodities (Oil, Coal, etc) which it sells to the world, in particular China. The increase in demand of the AUSD is seen in Figure ONe. As the quantity demanded of the AUD increases from Q1 to Q2, the Price of the AUSD in terms of the Yuan also goes up, from P1-P2.
As a countries imports increases, the country will experience depreciation. To import goods a country must sell their own currency and buy foreign currencies. Thus the supply of the currency in the market increases, therefor the value of the currency decreases. The second factor which affect an exchange rate in a floating exchange rate system is through flow of funds. When there is an inbalance in the balance of payments, there will either be an inflow of funds (where people are investing in your country) and an outflow of funds (where people in your country are just spending money on foreign goods). The third way a currency can affect a floating exchange system is through specculation. When people expect appreciation, the demand of the currency will increase because they will try and buy the currency. When investors expect depreciation, because people will sell the currency expected to depreciate. Section 4.5-4

China Vs Usa

harecon — Mon, 06 Dec 2010 00:41:54 +0000

As we know there has been some recent controversy between China and the United states regarding the Chinese currency (Yuan). According to recent claims by the United states, the Chinese government has been using their currency to gain an unfair advantage over trade.
To state wether or not the United States government has a valid claim over this controversy, we must first understand how the Chinese government would be able to do this. The Chinese government, unlike many other major world economies has a managed economy. This means that though their economy tends to fluctuate, it is within the boundaries set up by the Chinese government. Meaning that if they decide that there needs to be deflation, they may “fix” the amount of international trading to make allow happen. In short they allow revaluation and devaluation to happen at will

This issue would be fine, however obviously because all global economies are linked, a shift in one currency will deeply affect the value of another currency. By reevaluating or devaluating an economy at will it affects to a great extent the imports and exports of another country, and thus other nations industries. For example, if lets say an automobile manufacture is deeply dependent on Chinese goods to use as factors of production, if the Chinese industry reevaluates the currency (makes it worth more in terms of another currency, in this case the USD) it will affect the amount of automobiles produced. In this theoretical case it will decrease the amount of automobiles produced because the cost of the factors of productions has increased.

In reality however China has unfortunately devaluated the Yuan, causing major setbacks in domestic economies around the world. With the Yuan depreciating nations can buy foreign products for incredibly cheap prices. Thus allowing it much easier for Chinese industries to dump their products in the United States economy. To dump, (in economic terms) means to put in products in a foreign economy at a lower price than it will take for that economy to produce that product. In other words, lower than their cost of production.

If we observe the graph below, (figure 1) we can see the affects of this devaluation of Yuan will have on the price of the Yuan. The Yuan will cause a current account surplus on Chinese goods, and the flow of income. (Current Account Surplus is when there is more exports than imports). When a current account surplus happens, there will be an increase in the demand of Chinese Yuan. Thus increasing the quantity of the Yuan. However, the price of the Yuan will also happen. Shifting the Price from P1-P2. Demand of the Yuan is expected to increase from D1-D2, while the supply curve (the supply of Yuan) should stay the same.

Chinese Current Account Surplus

To state wether or not this is ethically correct or not is based purely on opinion. I partially agree with the claim that it is unfair because this will greatly affect the U.S governments aims to recover economically fully by the 2012 elections. However, I also support free trade to a very large extent. (Free trade is the ability to trade freely between nations without any trade barriers such as tariffs or quotas). By not allowing this to happen and complaining to the UN, the United States is being hypocritical. I think a reasonable solution would be to increase the tariffs on the imported Chinese goods for a while. (Tariffs are any taxes put on any imported foreign goods, usually per unit).

How I did on my DBQ

harecon — Mon, 08 Nov 2010 00:04:32 +0000

My data response was a lot better than I expected. Seeing as in my practice DBQ I found some of the questions really hard I find my high 6 very rewarding. I understood the diagrams much more in this assignment. The part I fell through was the actual descriptions of the demand and supply graphs, If I talked about the price and quantity directly that would have resulted in a better grade. In part d my organization and lack of evaluation stopped me from getting a higher grade.

Globalism vs Protectionism (Round 2)

harecon — Sun, 17 Oct 2010 06:23:39 +0000

From the in class debate we had not too long ago I learned a couple of very interesting things. The first thing I learned was what economists call the “race to the bottom”, where governments allow, or ignore firms who over pollute. They do this because it is the only way they can compete with in the global market. The second thing I learned is that globalism can lead to a loss in culture. People who move away from their homeland tend to loose their cultural identity, though this is controversial because it is hard to define what a culture is. The third thing I learned is that globalism may lead to abuse on the working class, this is controversial as well to a certain extent. If it was not for the globalism the workers may not have a job, and they have the ability and the right to move away from that job if they want to. I learned two important things about protectionism. The first being protectionism may lead to a recession, or worsen it by a great standard. The second thing I learned about protectionism is that it encourages in-efficiency. The argument being that the firms tend to go out of business if they are in-efficient, and by protecting them and allowing them to keep going they tend to waste valuable resources. From what I have learned I still stand by my original decision that Globalism is better than Protectionism.

Match of the Century: Free trade vs Protectionism

harecon — Mon, 04 Oct 2010 09:59:54 +0000

The idea of free trade is basically that firms can trade freely with other nations . Protectionism on the other hand is the thought that certain firms must be protected in order to insure that goods and services can still be produced, and they not be out done by other nations. Personally I am for protectionism as opposed to pure free trade. Those for free trade may argue that the market itself should decide which product is the best and weed out all of the inferior goods for the consumers. Those who fail were meant to simply fail. There is no protectionism in nature is there?
Well that may be the case. But if there were no protectionism I argue that economies of nations may collapse. With all the goods being produced in foreign nations where goods can be produced for cheap the GDP (gross domestic product) will fall greatly. People will be out of work, leading to a high amount of deflation because they are spending much less.