How does private savings impact investment?  Why is it important for individuals to save in an economy?  How do public policies such as tax policies affect savings rates?  How do government budget deficits affect interest rates?

Private savings are not risky and they can be use as an investment. Indeed, private savings and investments have a mutual benefit. People who save promote economic growth. The more people save and deposit in their bank accounts, the more money accessible for banks to loan. As well as it increases employment and revenue, which is good for the economy. Tax policies affect saving rates by having a limit on how much people are able to save. As the tax rate increases the less likely people will be able to save. Budget deficit is when the government spends more than what they have. When the government has a budget deficit the supply of loanable funds decreases causing the interest rate to go higher and discourage people from getting loans.

The US is running record budget deficits.  Define crowding out. Look for an article talking about it.  Do you think it’s a problem? Why or why not?

Crowding out is when the government has a higher deficit so they have to borrow form the private sectors in order to receive cash. This is a problem because the government is going to issue bond to private investors that will decrease the supply of loanable fund and increase demand from the private sectors. Budget deficits are a problem because it will increase the interest rate and society won’t be able to apply for loans. It is the same problem as a household experiencing financial problems. Such as spending more money than what they are actually able to provide. It will create a deficit becoming an issue, such as running out of money.

What affects human productivity?  Does public policy affect the availability of resources people need to be productive?  How? Give an example of a public policy you think either inhibits or promotes long run productivity growth.

There are several factors that affect human productivity. For instance, poverty. This is cause by the inability of a person to work and receive income. There are several reasons a person is unable to work such as health. If a person is not ill or is not mentally stable it will be hard for him/her to keep and employment, therefore, making it hard to get a paycheck. Limited tools and resources can also make people lose motivation and not focus at work. it makes the job harder and unpleasant. It becomes hard for the company to keep employees.

Public policy does affect the availability of resources people require to be productive. Trade wars limits people form doing business. Not everyone has access to obtain everything necessary to survive so trade is essential. For businesses who trading is necessary a trade war is going to affect them. A policy inhibits or promotes long run productivity in health care. It makes a healthy environment making it easier for the community to be productive.

Many of you live in an area with high cost of living.  Is that something you considered before you moved to a ski area?

When I moved over here I moved with my parents, so, I was not aware of the expenses or how the economy really worked. Now, I am able to comprehend it better, and based upon the type of job I had is how I would have decided if I could afford living in CO or not.

1.  How much can someone change the rate of inflation they face by changing what they purchase? Is this a serious overestimation problem with the CPI? Do you time your purchases around sales? Do you change your purchases because of sales?

Someone can change the rate of inflation by finding ways to bring the value of their purchases up. For instance, we can only buy things that are on sale such as at the end of every season. Or refraining from buying unnecessary things and only buy what is necessary. There is a problem of overestimation because of substitution bias. A product might more expensive, therefore, some consumers may buy a different product that is at a cheaper price. I do not think it should be a problem since not everyone will do that. For instance, wealthy people do not look at prices often, if they like it, they will buy it.

I do not always time my purchases around sales. However, around Christmas is when I like to do my purchases because there is a variety of items and there is usually good sales. I also have noticed that if I go shopping I tend to buy things that are on sale, even if I do not need them. So, sometimes I do change my purchases because of sales.

2.  What about the distortion caused by improvements in goods? Do you think that is a serious problem in measurement? Back in the 1970’s my Dad purchased an early calculator.  It handled addition, subtraction, multiplication, and division. It cost nearly $100.  Phones have a similar challenge as do cars and even airport bathrooms.  If your raise last year was 2% and inflation was 2% did you break even? Or did your life improve?

Distortion caused by improvements does not change the consumer price index. However, consumer behavior would change upon the improvement of the goods. It eventually becomes a problem in measurement because since it does not count the improvement of the goods it makes it inaccurate.

If my raise last year was 2% then, yes, I did break even because my percentage in raise is the same as the offset by the raise of inflation.

1.  What is the difference between an intermediate good and a final good?  Why do we care?

Intermediate goods are products that are not finished yet. They can be use to make multiple products. For instance, the flour to make bread would be an intermediate good while the bread would be the finished product or good. This is important because intermediate goods are not count for GDP while finished products that are ready to be sold and be consumed count as a part of the economic value of the GDP.

2.  Is GDP a good measure of well-being?  Why or why not?  What is missing?  Has what is missing changed over the years? (For example, if improvements in products are not counted, is that more important now than it was a few decades ago?)

GDP measures the value of final goods produced in the country GDP is a good measure of well-being monetarily. The book says that a country with a larger GDP has a better chance of having access to things more easily. The more labor and production of goods the people make the more the GDP increases. The more overwork people are the less they can enjoy themselves so it would not be a good measure of well-being. It is important to keep in mind that GDP only counts for products sold in markets, the products produced at home do not count for the GDP. The way they measure GDP has not changed. However, they politicians are discussing including the well-being for the environment and people individually.

3. What do you think of other measures such as Gross National Happiness pr Gross Progress Indicator?

Gross National Happiness and Gross Progress indicator include physical, mental health, equality, and education. It could be good if all of these could be calculated individually to measure the well-being of people and environment. I personally, like the idea of measuring quality of life factors and this is what Gross National Happiness focuses on.

1.  Describe efficiency from the perspective of an economist.

The belief that it is impossible to help or give one person without the other one losing something. It is also when production of goods and services maximizes total surplus. The community plays an important role because when they do their best, they ensure a stable economy with low cost production and consumption. Furthermore, it is also doing things the best way we can using limited resources without wasting.

2. Why are producer and consumer surpluses important in determining market equilibrium?

Surplus is important because the price equilibrium should be beneficial for the consumers and producers. It should be where both can obtain something without losing. If the market surplus is below the equilibrium price then quantity supplied is going to be lower than quantity demanded.

3.  Should market efficiency always be the goal of policy setters?  Why or why not? Is there a trade-off between efficiency and equality? If you don’t like efficiency what is your preferred alternative?

Market efficiency should be part of the goal. The best way to do it is to bring equality up to a level where it does not hurt efficiency. A balance is needed because if there is more than the other than it reduces the other. Society needs both.

There is a trade-off between efficiency and equality because efficiency is based on how much someone values something while equality is equal opportunities for everyone. I like efficiency because I believe that in most cases something cannot be improved without something else being affected.

How does this relate to the theories from the chapter?

This chapter focuses on supply and demand. In Venezuela, the government passed a law to price selling low so that people from lower-class could afford them. But the equilibrium price was higher than the selling price. So, it created a large shortage.

Now consider a different case.  After Hurricane Katrina speculators brought in bottled water, but charged quite a lot for it.  What might have happened had price controls been imposed?  Where does the concept of fairness fit into this theory?

In the case of hurricane Katrina where water was brought in and sold at a higher price. The reason could have been because there was a higher demand than supply, thus, causing the price to be elevated. If the government had controlled the selling price.

 How is are the two disaster situations different?  Will supply and demand be affected in the same way? Why or why not? What information is conveyed by the price in both situations? Is it accurate? How do prices tell people to behave?

 These situations are different because one affects the nation’s economy caused by the government, while the other just a region caused by a natural disaster. Supply and demand are the same because they are necessary for survival. If Venezuela’s government changed the price control, then, there would be a shift in supply and demand.

In many large cities you can now use your cell phone to call Uber or Lyft instead of hailing a taxi.  Would you expect this to affect the prices of taxi medallions (that is really the supply of taxis)?  Why or why not?  Talk about supply and demand curves in your answer. Make sure you can draw them!

As the demand for Uber increases so does the price. Uber is more accessible and easier to use so it creates a shift on the demand curve. Whereas the Taxi supply is decreasing making the prices increase by a lot. I know there are a few cities where this would not affect as much as in others, such as NYC because it is harder to get a license to have an Uber car. Since Uber is more convenient than Taxi, it makes the supply increase since there is more demand so the shift in demand curve will increase.

Can you think of an example where you watched the supply of a good or service change rapidly?  (For example, a new hotel or restaurant opened.)  Based on the chapter what would you expect to see happen? Why?

I can”t think of how rapidly the change was Red Box and Netflix coming in the market with a more convenient access to movies. Red Box offers the most recent movies, at a more cheaper price than buying or than renting them at Blockbuster. It may not be as convenient as Netflix but it is definitely a good deal and it has been in the market for quite some time. On the other hand, Netflix provides comfort and accessibility. It does not have the most recent movies but it offers other options, such as T.V shows, documentaries, among others. It is now available in different languages. These two are creating a knock-on effect on the rest of the broadcasting industry.

Give another example of a concept from this chapter.  For example I used AirBnB to rent an apartment in San Francisco a few years ago.  How did AirBnB affect the supply of short term room rentals in San Francisco? How about the supply of long term rentals?
One good example is renting books versus buying them. Buying books that you will only need for a semester sometimes can seem like a waste of money. Books are expensive and only neccessary for for two semesters at the most. Knetbooks among other companies such as Chegg, and Cengage give us the opportunity to rent used, or new books at a affordable price. Other companies such as Amazon only give you the option of buying. Amazon at the beginning only sold books, then, they started adding more to their inventory.

What are two weaknesses in the buy local argument?

Two of the weaknesses in the argument is that there is not a variety of products and that prices will be higher.

After watching the video are you still going to make an effort to buy local on occasion?  Why or why not? 

I personally am not a enthusiast of buying locally. When I do buy locally is mainly produce. It is definitely better and it makes you feel better that you are contributing to the local economy but being able to find a variety or all the products that you wished is hard. I agree with the video that local products are more expensive so “we voluntarily make ourselves poorer.”

What economic strengths of buy local are not mentioned in the video?

That supporting local businesses gives more money to the local economy because the sale taxes go in the local economy.

From the perspective of Colorado, is trade with Wyoming different from trade with China? Why or why not? Keep in mind that Colorado doesn’t trade with Wyoming.  Individuals in Colorado purchase items produced in Wyoming 

It is definitely different. A trade with China would be an international trade while with Wyoming would be within the United States and it would help the USA economy. Also, Wyoming is closer to Colorado, making it easier and more faster for the products to get to their destination. On the other hand, China is a country, and is much bigger than Wyoming therefore it has a lot more to “offer”, there is more variety. So, it has its cons and pros.

How does the use of a very simplified model of the economy such as those found in a production possibilities frontier help you to understand the economy? Did you find it useful?

I found the information very useful because it helped me visualize how the trade offs work and how supply and demand are very important for the economy.

Give an example of something you believed or heard frequently about the economy before reading this chapter.  Did your belief/the comments lead to positive or normative statements? Why? And why does it matter? An example of this that is in the news a lot is international  trade – we hear it talked about in terms of winners and losers, but when you make a trade with your local grocery store you both win.  In fact, trades don’t occur unless both the buyer and the seller “win”. For other economic “myths” just google “economic myths”. 

Every time I heard the word economy I always thought about money, and how the government was able to finance it. By reading the book I have learned that there is more to that. It is not only for government but households, businesses, etc. It is more about people’s behavior, including their skills to make important decisions, strategies. The wealth and resources especially in terms of production.

1. What new questions do you have now about the US economy based on this chapter?What in this chapter made you think about an economic concept differently than your previous beliefs?

I found really interesting how this chapter explained trade-offs. I did not know that they were important and beneficial for the countries. Is not about when one wins the other loses. Trades between countries make each of them better because they have the opportunity to specialize in what they are best at.

2.What new questions do you have now about the US economy based on this chapter?

How does increase competition slows down the income growth in the USA? Why creating more money means less money? I’m interested in learning more about the hiring process and how it affects economy.