Economics HW 5/31/14

1.Draw a circle and in the circle, write “The Analysis of the Impact of Technology on the Economy.” Draw about 20 lines that look like sun rays around the circle.

 

2. Brainstorm to come up with words, phrases, people, and concepts you associate with the relationship between technology and the economy. President Obama, Steve jobs, Mark Cuban, Donald Trump, money, taxes, stock market, Wall Street, food stamps, iPhones, iPad, Samsung, Fiot, Hybrid cars are the future, solar panel windows on houses.

3. List any works of the impact of technology on the economy literature, movies, or songs you have read, seen, or heard of: In the movie, Wolf of Wall Street, you can see how important money plays a role in the stock market. In the movie, Social Network, you also see how a simple idea can make you large amounts of profit. In songs, you hear all the time about how fancy an entertainer’s car is. You can see how technology is beneficial in  an economic way.

4. Respond Yes or No to the following statements and think of a specific situation that exemplifies your position:

_Yes__ While frictional unemployment is short term, structural unemployment can last for longer periods because workers need time to learn new skills. For example, employment by U.S. steel firms dropped by more than half between the early 1980s and the early 2000s as a result of competition from foreign producers and technological change that substituted machines for workers.

__Yes__ Technological change helps economies avoid diminishing returns to capital.

__No___ Technological change shifts up the per-worker production function and allows an economy to produce more real GDP per hour worked with the same quantity of capital per hour worked.

__No__ Because of diminishing returns to capital, continuing increases in real GDP per hour worked can be sustained only if there is technological change.

_Yes__ In the long run, a country will experience an increasing standard of living only if it experiences continuing technological change.

__No__ Romer argues that the accumulation of knowledge capital is a key determinant of economic growth. Firms add to an economy’s stock of knowledge capital when they engage in research and development or otherwise contribute to technological change.

__Yes__ We have seen that accumulation of physical capital is subject to diminishing returns: Increases in capital per hour worked lead to increases in real GDP per hour worked but at a decreasing rate. Romer argues that the same is true of knowledge capital at the firm level. As firms add to their stock of knowledge capital, they increase their output but at a decreasing rate. At the level of the entire economy rather than just individual firms, however, Romer argues that knowledge capital is subject to increasing returns. Increasing returns can exist because knowledge, once discovered, becomes available to everyone.

__No__ Romer points out that firms are unlikely to invest in research and development up to the point where the marginal cost of the research equals the marginal return from the knowledge gained because other firms gain much of the marginal return. Therefore, there is likely to be an inefficiently small amount of research and development, slowing the accumulation of knowledge capital and economic growth.

Now that you’ve answered these questions, you are ready to experience the world in which Robert Solow and Paul Romer, the developers of the economic growth model and new growth theory respectively, live. So, open the book authored by Hubbard and enter.

Chapter 3 of Where Prices Come From: The Intersection of Demand and Supply

Vocabulary: Look up the following words in the dictionary (if necessary) and write their definitions.

The Law of demand: The inverse relationship between the price of a product and the quality of the product demand.

The Law of Supply: holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price causes decreases in the quantity supplied.

A change in demand: changes in consumer expectations about the future price of a good or future income can cause a shift in the current demand for the good.

A change in quantity demanded: a movement along in a given demand curve caused by a change in demand price.

A change in supply: when the suppliers of a given good or service have altered their production or output.

A change in quantity supplied: a movement along a given supply curve caused by a change in supply price.

Comprehension: Write your answers to the following questions in complete sentences:

1. What is the assumption that underlies the law of demand? Consumers will  buy more of a good when the price falls and less of a good that results from a change in price, making the good more or less expensive relative to other goods that are substitutes.

2. What is the important distinction between a change in demand and a change in the quantity demanded?  In a change of demand, the price is expected to raise or drop. Change in the quantity demanded the price will raise or drop depending on a change in demand price.

3. Define the law of supply as used in chapter 3. Holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price causes decreases in the quantity supplied.

4. How do you feel about rise in product price at the supermarket? I do not agree with it, but I need to realize I have to be patient for a sale, or just go along with it and just buy the product regardless of the price.

Chapters 9-11

1. At what point did you realize what business cycle meant? How did you figure it out? In the reading, when it talked about the recession and Ford laying off people, I understood what the book was saying.

2. What symbols can you find in the assigned pages? Do you think they’re effective? In what ways might the characters names be symbolic? Some symbols I can find are money, demand, and prices. They’re effective because demand, prices, and money are used every day in our lives.

3. How do you think George W. Bush feels about unemployment? Mixery index? Would he say they are microeconomic or macroeconomic issues? Would he say they are good for individuals or for society? Personally, I do not thin k George Bush cares about unemployment because he is employed. He would say they’re both micro and macroeconomic issues. He would say they’re bad for the society.

4. Did any of you write any favorite sentences down or mark any passages you found significant? If so, which ones? What struck you about them? I did not find any significant passages.

5. What would you say to or ask Hubbard if he visited your classroom? I would ask him everything he knows about economics. I would also ask him using his knowledge, how can I be a better consumer.

6. How might this textbook be used effectively in a social studies class? In a science class? It will help you be a better person in the world of money. You will be able to understand the ways of money and the struggle people go through to receive their high paychecks. I don’t really know how this book would be beneficial in a science class, science is a completely different subject.

7. Inflation is very safe, but that comes about at the cost of economic freedom. There is always a tension between safety and freedom. Think of ways this plays out in our government and society today. What individual liberties have people given up due to safety? What issues are currently being debated in this area? People have traded in their expensive cars for cheaper ones. People are using less oil, and substituting it for hybrid goods. A lot of people in Miami, especially south beach, walk and ride bike more than using their cars because gas prices are expensive.