Functions of Government – per.4&6

Thursday March 22, 2012 – Periods 4 & 6

  Today we learned the general purpose and function of government is to protect individual rights, to promote a stable legal environment for economic activity, and to promote policies that support the well-being of citizens. Government tries to accomplish its purpose in four ways: providing public goods, redistributing income, regulating economic activity, and ensuring economic stability. Public goods are a special type of goods and services that government supplies to all citizens. Government can promote the well being of citizens by redistributing income with social insurance and public assistance programs. Other functions of government involve regulating economic activity. Many people criticize government involvement in the economy and think that market solutions are better than government involvement.

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Obstacles to Economic Growth

Monday March 19, 2012 – Periods 1 & 3
Tuesday March 20, 2012 – Periods 4 & 6

  Today we learned that developing countries face numerous obstacles, including population pressures from high birthrates and increasing life expectancies. The major obstacles to growth are local traditions, rapid population growth, misuse of resources, and trade restrictions. A shortage of natural resources, diseases, substance abuse, religious beliefs, limited education and technology, a heavy burden of external debt, corruption, the aftermath of war, and capital flight add to their problems.

 

IES Research

Friday March 16, 2012 – Periods 4 & 6
Wednesday March 21, 2012 – Periods 1 & 3

  Today we will begin the International Economic Summit (IES). The IES program is a world trade simulation of the global economy and a learning experience on globalization, international relations and economics. The IES will teach you the fundamental economic concepts within the context of international trade. The IES program challenges you to think critically about the benefits and costs of trade and to explore the multifaceted process of globalization. You will be divided into groups and assigned a country, adopting the role of ‘Economic Advisors’ to that country. Over the following few weeks your group will research your country’s social, political, and economic conditions in order to assess its strengths and weaknesses and create a strategic plan to improve living standards for your population. At the Mini Summit, student teams, representing the nations of the world will compete for scarce resources, form strategic country alliances, debate global issues, invest in long term development projects, interact with global economic institutions, and seek to stabilize and advance the global economy.

Developing Countries

Wednesday March 14, 2012 – Periods 4 & 6
Thursday March 15, 2012 – Periods 1 & 3

  Today we learned that developed countries have increased their standards of living by moving from agricultural to industrialized economies. Most of the people in the world live in developing countries. These are countries whose average per capita GDP is a fraction of that in more industrialized countries. Developing countries’ problems are similar to the ones that industrialized countries have. The main difference being that their problems are much larger. Developing nations struggle with life threatening challenges such as widespread poverty and hunger. In many cases, developing nations must deal with keeping their people alive. Developing countries are usually characterized by low GDP per capita, emphasis on agriculture, poor health conditions, low literacy rates, and rapid population growth.

Functions of Government – per.1&3

Tuesday March 13, 2012 – Periods 1 & 3

  Today we learned the general purpose and function of government is to protect individual rights, to promote a stable legal environment for economic activity, and to promote policies that support the well-being of citizens. Government tries to accomplish its purpose in four ways: providing public goods, redistributing income, regulating economic activity, and ensuring economic stability. Public goods are a special type of goods and services that government supplies to all citizens. Government can promote the well being of citizens by redistributing income with social insurance and public assistance programs. Other functions of government involve regulating economic activity. Many people criticize government involvement in the economy and think that market solutions are better than government involvement.

Measuring Economic Performance

Thursday March 8, 2012 – Periods 1 & 3
Monday March 12, 2012 – Periods 4 & 6

  Today we learned that measuring national output deals with the economy using aggregate measures of output, income, prices, and employment. Gross Domestic Product (GDP) is the nation’s most comprehensive measure of total output. Economists view the economy as being organized into four sectors: the consumer or household sector, the investment sector, the government sector, and the foreign sector. These sectors are then combined to form the output-expenditure model, which is written as GDP =  C + I + G + F.

Business cycles are the regular ups and downs of real GDP. There are many factors that influence business cycles: changes in investment spending, innovation and imitation, monetary policy decisions, and external stocks.

Every month, the Census Bureau identifies unemployed persons. The number of unemployed is then divided by the civilian labor force to find the unemployment rate. The unemployment rate is comprehensive, but does not count the dropouts, nor does it distinguish between full and part time employment. The kinds of unemployment include frictional, structural, cyclical, and seasonal unemployment. As a result of unemployment, uncertainty, political instability, and social problems can occur.

Inflation is the increase in the general level of prices of goods and services. Several price indexes are used to measure inflation. The consumer price index (CPI) is a statistical series that tracks monthly changes in the prices paid by urban consumers for a representative “market basket” of goods and services. The CPI is used to measure inflation. Causes of inflation include strong demand (demand-pull), rising costs (cost-push), and wage-price spirals, along with a growing supply of money. Therefore, inflation can reduce purchasing power, distort spending, and affect the distribution of income.

Money and Banking

Friday March 2, 2012 – Periods 1 & 3
Wednesday March 7, 2012 – Periods 4 & 6

  Today we learned that the concept of money and the usage and the amount of money in circulation are ideas that most people take for granted. Without money, people would have to barter, or exchange goods and services for other goods and services. Early money included shells, dog teeth, feathers, and miniature iron spears. Anything can be used as money as long as it is accepted as payment. Products and services have been obtained through bartering, commodity money, representative money or fiat money. All money serves three functions: a medium of exchange, a unit of accounting, and a store of value. There are six characteristics of money: durable, portable, divisible, stable in value, scarce, and accepted. The gold standard, which made all currency convertible into gold on demand, was adopted in 1900 but was abandoned by 1934. The money supply consists of not only bills and coins but also checking and savings deposits and certain other liquid investments. We use both narrow and broad definitions of the money supply to measure the amount of money in circulation. M1 is the narrow definition and includes moneys that can be spent immediately and against which checks can be written. M2 is the broad definition and includes M1 plus near moneys, such as savings deposits and money market deposit accounts.

The banking system uses a fractional reserve system, which means that only a small part of the checking account deposits are actually backed up by cash in the bank vault. Banks loan out the rest of the deposits to other customers. This allows the money supply to grow far beyond the amount of hard currency in the country.