Transcript Course Research Paper (Week 8)

MBA 540: Societal Economic Analysis
Lesson #1 Agenda
 Introduction / Icebreaker / Expectations ………and Pizza Pizza!
 Course Grading Rubric
 Discussion Board (Wkly, not week 8; 50 pts/week, except Week 1)
 Class Discussion (Weeks 1,3,5; 25 pts/week)
 Analytic Papers (Weeks 2, 3, 4; 50 pts/paper)
 Case Studies (Weeks 5 & 7; 125 pts/paper)
 Course Research Paper (Week 8)
 Total
 Course Map: See Course Module
 Resources
– Textbooks
– Supplemental Readings/Videos (posted on Blackboard)
– Elizabethtown Library Research Resources
 Course Research Paper
 Class Discussions
Rick Coplen; Cell: 703-786-7181; [email protected]
325 pts
75 pts
150 pts
250 pts
200 pts
1000 pts
1
(32.5%)
(7.5%)
(15%)
(25%)
(20%)
(100%)
Please introduce your neighbor …
 Name
 Where you grew up and have lived …
 Current, previous, and future employment---“dream job”?
 Something “interesting” about you …
 Key questions and topics about societal economic analysis
that you want answered and/or to learn more about?
2
Best motivational videos ever for creative people and startups ...
http://www.youtube.com/watch?v=0JUFjTOM32g&list=PLPjc4nlms-aL_Ce-HybvCVUe5yIXI88MY
http://www.youtube.com/watch?v=hzBCI13rJmA&list=PLPjc4nlms-aL_Ce-HybvCVUe5yIXI88MY
Our focus …
Let’s continuously ask…
“How can I best use this (concept, theory, technique, etc)
to become the best manager possible as I deal with the
complex challenges of the evolving workplace?"
Our focus is … practical application!
Please share your “light bulb” moments!
Please feel free to disagree with the text!
Course Learning Outcomes
• Develop an economic view of the state of the world through the
application of rigorous analysis that connects real-world issues with
core economic theories.
• Assess and interpret the challenges of the global economic environment
by exploring and evaluating a wide-range of issues that encompass the
private-sector, government and societal environments.
• Appraise the economic impact of issues and synthesize a course of
action by analyzing arguments by thinking economically, while
recognizing and avoiding logical traps.
• Envision what possible changes are likely to occur in the global
economic environment over the next decade and apply economic
concepts to develop rational market actions.
• Synthesize an understanding of the interplay between economics and
the process of creating public policy.
• Apply economic methods; build practical approaches that promote
both the short and long-term economic well-being of the
organization and society.
Soda
Production Possibilities Curve
Unattainable
(outside the curve)
0
Attainable
(on the curve and on the inside)
McGraw-Hill/Irwin
Pizza
©2012 The McGraw-Hill Companies, All Rights Reserved
1-6
Increasing and
Constant Opportunity Cost
• Increasing Opportunity Cost
• Exists when the additional resources required to
produce an additional unit grows as more output is
produced.
• Likely to occur when people are different in their skills.
• Constant Opportunity Cost
• Exists when the additional resources required to
produce an additional unit remains the same as more
output is produced.
• Likely to occur when people are identical in their skills.
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
1-7
Soda
Figure 7 Illustrating Increasing Opportunity
Cost
Opportunity Cost of going from 0 units of
Pizza to 1 unit of pizza
10
9
8
7
6
5
4
3
2
1
0
Opportunity Cost of going from 1 unit of
Pizza to 2 units of pizza
Production Possibilities Frontier
Opportunity Cost of going from 2
units of Pizza to 3 units of pizza
1
2
3
Pizza
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
1-8
Soda
Figure 8
Illustrating Constant Opportunity Cost
Opportunity Cost of going from 0 units of
Pizza to 1 unit of pizza
9
8
7
6
5
4
3
2
1
Opportunity Cost of going from 1 unit of
Pizza to 2 units of pizza
Production Possibilities Frontier
Opportunity Cost of going from 2
units of Pizza to 3 units of pizza
0
1
2
3
Pizza
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
1-9
The Circular Flow Diagram
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
1-10
The Circular Flows of Money and Products
Costs
Resources
Resource
Markets
Income
Resources
Business
Firms
Consumers
Products
Receipts
Product
Markets
Products
Expenditures
Market Demand and Supply Curves / Shifters
and Equilibrium Price
Demand Curve Shifters
Consumer Tastes
Price
Consumer Income
Supply Curve
Demand Curve
Number of Consumers
Level of other prices
- Substitutes
- Complements
Equilibrium
Price
Supply Curve Shifters
Technology
Input Prices
Changes in “Demand” vs
Changes in “Quantity Demanded”
Equilibrium
Quantity
Quantity
12
Movements in the Demand Curve
Determinant
Result of an
increase in
the
determinant
Result of a
decrease in
the
determinant
Taste
D shifts right
D shifts left
Income-Normal Good
D shifts right
D shifts left
Income-Inferior Good
D shifts left
D shifts right
Price of Other Goods-Complement
D shifts left
D shifts right
Price of Other Goods-Substitute
D shifts right
D shifts left
Population of Potential Buyers
D shifts right
D shifts left
Expected Future Price
D shifts right
D shifts left
Excise Taxes
D shifts left
D shifts right
Subsidies
D shifts right
D shifts left
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
2-13
Movements in the Supply Curve
Determinant
Result of an
Result of a
increase in the decrease in
determinant
the
determinant
Price of Inputs
S shifts left
S shifts right
Technology
S shifts right
S shifts left
Price of Other Potential Outputs
S shifts left
S shifts right
Number of Sellers
S shifts right
S shifts left
Expected Future Price
S shifts left
S shifts right
Excise Taxes
S shifts left
S shifts right
Subsidies
S shifts right
S shifts left
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
2-14
Intended Spending
Determination of GDP = C + I + G + (X-M)
Co + I + G + (X-M)
(zero tax rate)
C1 + I + G + (X-M)
(15% tax rate)
45°
GDP1
GDP0
Gross Domestic Product
If …
Then …
Taxes
GDP __
Taxes
GDP __
I
GDP __
I
GDP __
G
GDP __
G
GDP __
Expansionary Fiscal Policy
PI
AS
PI’
PI*
AD’
AD
RGDP*
McGraw-Hill/Irwin
RGDP’
RGDP
©2012 The McGraw-Hill Companies, All Rights Reserved
1-16
9-16
Contractionary Fiscal Policy
PI
AS
PI*
PI’
AD
AD’
RGDP’
RGDP*
RGDP
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
1-17
9-17
Alternative Ways of Dealing with a
Recessionary Gap
Price
Level
Shift in Aggregate Supply
Aggregate
Demand
Potential
Output
Short-run
Aggregate
Supply
Wages ___
Input Prices ___
Supply shifts _____
Shift in Aggregate Demand
G ____
T ____
Demand shifts ___
200
250
Total Real Output
Annual Rate of Change
of Price Level (%)
Philips Curve: Relationship between
Inflation and Unemployment
If High Rate of Inflation …
___ unemployment rate (%)
If Low Rate of Inflation …
___ unemployment rate (%)
Phillips Curve
If High Unemployment Rate
___ Rate of inflation
If Low Unemployment Rate
___ Rate of inflation
Unemployment (%)
Modeling Monetary Policy
• If the Fed wants to expand the economy it can
•
•
•
•
buy bonds
decrease the Federal Funds or Discount Rate
lower the reserve ratio.
This increases the supply of loanable funds. This lowers
interest rates which increases aggregate demand.
• If the Fed wants to contract the economy it can
•
•
•
•
sell bonds
increase the Federal Funds or Discount Rate
raise the reserve ratio
This decreases the supply of loanable funds. This raises
interest rates which decreases aggregate demand.
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
1-20
10-20
Expansionary Monetary Policy
Interest Rates
Price Level
S
AS
S’
r
r’
AD2
D
Loanable Funds
McGraw-Hill/Irwin
AD1
RGDP
©2012 The McGraw-Hill Companies, All Rights Reserved
1-21
10-21
Contractionary Monetary Policy
Interest rate
Price Level
S’
AS
S
r’
r
AD1
AD2
D
Loanable Funds
McGraw-Hill/Irwin
RGDP
©2012 The McGraw-Hill Companies, All Rights Reserved
1-22
10-22
Extend Unemployment Benefits?
There are 10,000 Virginians who have been struggling to find work for too long – and
because of Congressional inaction, they are beginning 2014 without any
emergency unemployment assistance.
For many, this makes a tragic situation potentially debilitating. These benefits help
folks keep the heat on and put a little bit of food on the table.
Earlier this week, the Senate passed the first hurdle in the fight to extend this critical
lifeline for those striving to find work. But there is a lot more work to be done to
ensure Congress passes this legislation – and I’m asking for your help.
Will you join my colleagues and me and demand that Congress extend emergency
unemployment benefits?
This shouldn’t be a partisan issue. With the help of both Republicans and Democrats,
Congress has always extended these emergency assistance programs when long
term unemployment has remained as high as it is today.
This isn’t just the right thing to do. It’s also good economics. Funds spent on this
program are reinvested in the economy quickly – spurring job creation and
economic growth.
Please help apply the necessary public pressure to get this done.
Add your name and demand Congress pass emergency unemployment benefits.
Thanks for your help,
Mark Warner
Useful websites ...
Forbes Magazine
http://www.forbes.com/
The Conference Board
http://www.conference-board.org/
Federal Reserve
http://www.federalreserve.gov/
Economist
http://www.economist.com/index.html
Business Week
http://www.businessweek.com/
National Association of
Manufacturers
International Monetary Fund
http://www.nam.org/s_nam/index.asp
Industry Week
http://www.industryweek.com/
IssuesPA
http://www.issuespa.net/
US Government Bureau of
Labor Statistics
US Government Bureau of
Economic Analysis
http://www.bls.gov/
http://www.imf.org/external/country/index.htm
http://bea.gov/
24
Ben Bernanke
Former Chairman, Federal Reserve Board
•
“Perhaps you should take the non-calculus based macroecon course.”
•
From the Columbia Business School
http://www.youtube.com/watch?v=3u2qRXb4xCU
•
Fed’s response to the financial crisis
http://www.federalreserve.gov/newsevents/lectures/federal-reserve-response-to-thefinancial-crisis.htm