# PowerPoint Presentation TUSD Economics Summer 2011 Pueblo High School Mr Klein Travis

Document Sample

```					Economics Summer 2011
Pueblo High School
Mr. Klein
Travis.klein@tusd1.org
Session 1: June 1 – June 15
PHS
Session 2: June 16 – June 30
THS
Past: 2007 – Marana HS
2008 – Mountain View HS
1. Write 2+ items that have gotten
2. Write 3+ items that have gotten
Assignment only 1 variable changes)
What would happen to the GDP of the US if…(assume
1.   The government increases education spending by \$12
billion
2.   Russians demand more US made cars
3.   The US government decides the border fence is too
expensive and cuts its funding
4.   US government places a tax on all Japanese imports
% more video games this year
market and invest 10% of their future incomes.
7. The price of food increases by 14% in 2010
8.   US consumers become fearful of the stock market and
change their investments into cash
9.   US new commercial building permits increase by 10%
10. US unemployment rate raises to 35%!
Inflation
• Rise in
prices over
time
• “cost of
living”
• “The real
value of
currency”
GDP
• GDP = C + I + G + (Exports – Imports)

• Which one is affected by inflation?
3. Write down 10 things you think
most families would buy in a month
Inflation
• Rise in prices over
time                   Always a percentage,
• “cost of living”       But unlike unemployment rate,
It can be more than 100, or
• Calculate using        a negative
Consumer Price
1-3 % inflation = normal
Index               Anything higher is bad for consumers

New Prices – Old Prices
• CPI =                                        X 100

Old Prices
Inflation calculator
If I buy 20 Gallons of gas per week

• At \$1/Gallon
• At \$2/Gallon
• At \$3/Gallon

• Social Security
Recently though
Calculate CPI
Slovenia 2006, in Euros               Slovenia 2008, in Euros

Housing                     100     Housing                     115
Transportation               20     Transportation               25
Food                         50     Food                         55
Energy                       15     Energy                       45
Medical Care                  5     Medical Care                 10
Apparel                      10     Apparel                      15

Total: 200                            Total: 265

265 - 200
INFLATION= CPI current year – CPI base year    SO                     100 = 32.5%
RATE                                            200 (2006)
CPI base year
You try one
United States 2006, in \$\$\$\$     United States 2008, in \$\$\$\$

Housing                  700     Housing                 690
Transportation           300     Transportation          310
Food                     100     Food                    120
Energy                    45     Energy                   90
Medical Care              45     Medical Care             45
Apparel                  100     Apparel                  95

Total: 1290                        Total: 1350

4. Calculate the US inflation rate
5. Is this a good rate or should we be worried?
6. What is deflation and why is it good?
Describe the economy of Uruguay from
1998-2004?

Uruguay GDP
(in Billions)
40
35
30
25
20
15
10
5
0
01
98

99

00

02

03

04

05

06

07
20
19

19

20

20

20

20

20

20

20
2005 Comparison
Uruguay's GDP:           \$30.66 billion

Spain’s GDP:             \$1.83 trillion

United States GDP:       \$12.36 trillion

Factors: population, resources, education,
crime
Zimbabwe
Population:
13 million
GDP: 4.72 billion
GDP/Capita:
\$402
Unemployment:
66%
Your G3 is advising the President of Zimbabwe on how to improve
the economy of his country.
Situation: Many blacks can not afford goods and food in the
markets. Business owners are allowed to charge whatever price
they want and since food is hard to find, its very expensive.
Local Zimbabwe businesses have a difficult time competing with
imports from the USA, South Africa and England. When
Zimbabwe businesses fail, people lose their jobs causing more
unemployment.

98% of the farm land is owned by white farmers, which was taken
in the 1800’s from native Africans. 90% of this country is black
and has no access to this farm land. The white farmers pay low
wages and often do not hire native blacks.

Many people in Zimbabwe do not have much money to buy food
with. The Zimbabwe dollar is a strong currency which is difficult to
get much of because the central bank doesn’t print very much
money for people to use.
Zimbabwe 1990’s
Gov’t
Problem            solution          EFFECT
High food           Fixed prices    Shortages
prices
Competition from
USA & SA          Banned          More shortages
imports
Blacks have         Redistributed   Still more
no land             land             shortages
President Robert
Mugabe
Not enough          Printed up      inflation
money                more money

Technically “hyperinflation”
What if I told you?
• Million dollars?
• 25 Billion dollars?
• 100 Billion dollars

• Fiat currency = value
only because we
think it does
Inflation
• Rise in prices
over time
• “cost of
living”
• “The real
value of
currency”
Why can’t we just print more money?
• Quantity theory of
inflation

Piles of currency in Zimbabwe
What else causes inflation?
• Cost push theory- when
producer costs increase,
producers raise their prices.
For example, increase the cost
of gasoline causes and
increase in the price of food.

• Demand pull theory –
When consumers demand
increases producers will
generally increase prices. For
example: fads or hot xmas toys
Of the 3 theories of inflation
• Which one can the government control?

• Which one seems like a natural
consequence of a growing economy?

• Which one might cause deflation?
Assignment
• Draw 3 comics showing each of the
theories behind inflation
Why does inflation happen?
Quiz – Macroeconomic indicators

• 12 minutes alone
• 7 minutes in groups

• Kid in Zimbabwe,
2008
Have someone at your table get
out a \$1
• What text is on it?
• What else do you notice about the \$1?
3 functions of money
• Person #1 explains money
as a medium of exchange
• Person #2 explains money
as a Unit of Accounting
• Person #3 explains money
as a Store of Value
Money
Anything that is traded or stores value
Accounting
Currency

Ancient China
Currency

Rome
Currency

Representative
Currency

Currency

Fiat
Currency
Currency

Fiat
Currency
Currency

Fiat
Currency
Currency

Fiat
Currency
Currency
Fiat
Currency

Foreign
exchanges

http://finance.yahoo.com/currency-
investing
Economic Rap battle
• John Maynard Keynes   • Fredrick Hayek
• Ideas? Page 424       • Ideas?
Economic Rap battle
•   John Maynard Keynes     •   Fredrick Hayek
•   Active fiscal policy    •   “invisible hand”
•   Deficit spend           •   Monetary policy
•   Government multiplier   •   Interest rates
Monetary
Fiscal Policy
Policy
• Controls “G”
• Interest Rates   • Effect on “C”, “I”,
Unemployment
• Money Supply     • Taxes
• Loopholes
• Spending
Monetary policy comics
• What role does the “Fed” play in the US
economy?

• 1 paper per group:
• Write 10 multiple choice questions A,B,C
based on the comic book
Without banks
• You would have to pay cash for the
following items:
• College (\$1500-3000/year)
• New Cars \$9000-35,000
• Houses (\$140,000-300,000)

• Time would be spent counting and
• Time saving + safety
How does the US banking system
work?
What is a Credit Union then?
• Smaller, regional, non-profit, theme based,
lower rates
Does the bank have to keep all the
money you deposit on hand? (Pg 400)
NO, fractional
reserve system
Who sets the reserve rate?

• “The
Fed”

• 1913
How does “the Fed” work?
6. Who controls “the Fed”? (pg 392)
7. What does “the Fed” do? (394-396)
Controls
Money
supply      Clears
Supplies                 Checks
Money

THE FED

Gov’t
Sets                    Accounting
Reserve
Requirements    Supervise
Banks
Why is the Chairman of the Fed sometimes
thought of as the “second most powerful
man in the US”? 398-399
• Cause: increases the
reserve rate
• Effect:

• Cause: lowers
reserve rate
• Effect:
What if the bank goes out of

• \$250,000 per US account
Monetary         Fiscal Policy
Policy
• Controls “G”
• Interest Rates   • Effect on “C”, “I”,
Unemployment
• Money Supply     • Taxes
• Loopholes
• Spending
Personal budget handout
Review

1. What is your opportunity cost of coming to
school today?
2. Why is opportunity cost important for large
3. What is the scarcest resource you have?

Guns

A                Republicans
Democrats?

B

Butter

```
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
 views: 19 posted: 9/15/2011 language: English pages: 64
How are you planning on using Docstoc?