Chapter 10 is titled “measuring a nation’s income” and introduces some of the key components that measure the entire economy. The chapter begins by expressing that income must equal expenditure. It then shifts to define GDP as being “the market value of all final goods and services produced within a country in a given period of time.” Its equation is GDP equals consumption plus investment plus government purchases plus net exports. The chapter then explains the difference between real GDP, goods and services valued at constant prices, versus nominal GDP, goods and services valued at current prices.

An intermediate good is something that will be used to create a final good. The difference is that it can be used to make other things as well, so the price of the intermediate good is included in the final good so that it is not counted multiple times. This would affect GDP because it would be counting the good more than once and the price would be over estimated.

There is good and bad to GDP’s measurements and there are definitely ways that it lacks to measure actual well-being, but overall it is a good measurement and is central to many aspects of the economy. Where it lacks is that it is really only focused on the financial aspects of society without taking into account other things that people find most important, like health, happiness and leisure. However with a better GDP, these things become more available and most people have the option to chose these over making more money. It also faults in measuring for goods and services made at home, the distribution of income, and other important aspects such as the quality of the environment. While the actual aspects that are missing may not have changed, how much society values these things has changed. For example, the environment is now so important to so many people, and has become more of a focus due to global warming, that it may be a more important missing variable than it once was.

Other measures such as Gross National Happiness and the Gross Progress Indicator are also very important. However, they measure different variables than GDP does and have a different focus and while they are also important and could be included or provided along with other information, they don’t have enough to stand as the main measurement alone.

Chapter 7 is titled “consumers, producers, and the efficiency of markets” and focuses on welfare economics, how the allocation of resources affects economic well-being. This is described by introducing the benefits for buyers and sellers, called consumer surplus and producer surplus, and leads to the analysis that the equilibrium of supply and demand maximizes the total benefits received by all buyers and sellers. If the “allocation of resources maximizes total surplus” the allocation is said to be efficient from an economists view. The chapter continues to weigh the differences between efficiency and equality.

Producer and consumer surplus are important in determining market equilibrium because the equilibrium price and quantity are determined by benefits received by buyers and sellers in the market. Consumer surplus is the amount a buyer is willing to pay minus the amount they paid and producer surplus is the amount a seller is paid minus their costs. Also, as seen on a graph, the total surplus is the area between the supply and demand curve up to the equilibrium quantity. Consumer surplus is the area above the equilibrium price and below the demand curve and producer surplus is the area below the equilibrium price and above the supply curve. Therefore, if either of this were to adjust at all, due to a shift in the supply or demand curve, or a change in the equilibrium price or quantity, there would be a direct change to the surplus.

Market efficiency should not always be the goal of policy setters because there are trade offs between efficiency and equality. While being efficient maximizes resources which is important because it creates the most amount of output, limits waste, and grows the economy, equality distributes economic prosperity among all members so that everyone shares well-being, which also makes the economy better off. There are benefits to both and there is definitely a trade off because there are times which maximizing output is most important and there are times when giving some benefits to everyone and making society as a whole better off is more important. This is based on personal belief and specific situations where some people think being efficient is most important and some people think being equal is most important.

Chapter 6 is titled “supply, demand, and government policies” and focuses on different controls on prices that the government can institute, particularly price floors and ceilings, and the different results if they are binding or not. It also introduces the basic idea of taxes and the effects on the market when they are either placed on buyers or sellers, and that in the end it will fall more heavily on the side which is less elastic.

This article talks about food and basic product shortages in Venezuela as a believed result of government imposed price controls to “make a range of foods and other goods more affordable for the poor.” Although it is a prosperous and well off country, there was a wide prosperity gap between the wealthy and poor, as well as having extremely high inflation of nearly 30% so that companies would withhold their products to cause shortages so they could increase prices, which cause these price controls to be imposed. However the price ceiling was set too low so producers didn’t make a profit, causing them to cut back on production. There were extreme shortages of products even in government subsidized grocery stores from private companies seized by the government for the “national interest”, however despite these problems people still believed it was beneficial because of how extreme the inflation was, yet in the long-run it will only be worse. This is also causing prices to rise elsewhere, such as in the black market and on products not under price control. This case relates entirely to this chapter and the governments decision of implementing price controls, and how that can result in a shortage of products and no profit for the producers all to make it more affordable.

The case of speculators bringing in water bottles after Hurricane Katrina and selling them at an extremely high rate shows a lack of morals and is taking advantage of people at a time when the are most desperate. Price controls would be a good idea in this time because it is helping people who have just had everything taken away from them and the water bottles didn’t need to make a large profit to the producers because it should have been a time when they were giving and not taking advantage of people. It is unfair for them to demand people to pay high prices for something that they need to survive like water when everything has just been taken away from them.

The two situations are different because in Venezuela the people who are suffering are the producers because they aren’t making enough money to continue production due to price controls and for Hurricane Katrina the buyers suffer because there is no price control to make it fair and affordable for them to purchase necessities. Supply and demand in both are similar because the demand is the same for the products however the supply is fluctuating by decreasing for the first scenario and becoming more expensive for the second. The information conveyed by the price in both situations is that there is an issue at the time, although the difference is that the government has convened in the first case which lowered the price and did not in the second which caused it to be far overpriced. Prices tell people to behave by not allowing them to overprice or underprice their products to harm the buyers or the sellers and make a sale unfair.

The article I chose is by the New York Times Magazine and is titles “the $15 minimum wage doesn’t just improve lives. It saves them” by Matthew Desmond. In this article the increases in minimum wage is described as turning it into a living wage. The article highlights the lives of two people who have experienced a minimum wage increase and how it has basically saved their lives.It is not focused on the negatives of an increase, such as an increase in unemployment, but on how it improves these peoples lives, especially their health and children. A doctor is interviewed saying that a $1 increase in the minimum wage would save more lives than a new heart drug. The article also talks about the intangible benefits that a better wage provides, particularly that it gives you dignity, value, safety, reduced stress and anxiety, a clearer mind, and free time. While the article does not focus on whether the price floor is binding or not, which would result in a surplus in labor and unemployment, it instead focuses on the benefits of an increased minimum wage and how it will lead to better and healthier lives and therefore better productivity and standard of living.

I really enjoyed taking this course both because of the textbook, which I found to be engaging and easy to understand, as well as the assignments which allowed for critical thinking in the homework and quizzes, the personal expression in the reflections, and interesting through interaction and learning other opinions in the discussions. I also really appreciated that the book proposed a list of important concepts at its beginning that it then liked back to in every chapter.

The concepts and theories that I found most interesting were the ones that I could relate to my everyday life and society. For this reason my favorite concepts were the ones related to political theories because I find these very interesting and would consider politics one of my most passionate subjects because of the influence they have on all of us and the choices they make for our benefit. I was also very interested in the concepts of unemployment, as a student who is concerned about my future career, and monetary policies and the financial system because it is something I am involved in everyday and yet know very little about. My thinking changed in areas that I feel I was not fully aware of before reading the book, such as debates over certain topics, such as the ideas in Chapter 23, and especially taxation because I think there are many benefits and negatives to it and hadn’t thought or even known about them before Chapter 8. I also found the benefits of international trade very interesting because of how often I am pushed to buy local and had never thought of the opposition to it.

In Chapter 23 the debate I found most interesting was whether tax laws should be reformed to encourage saving. I found that it initially proposed a benefit for everyone by protecting their money by saving, however the argument was that thus protects wealthier people more because they are more focused on saving which I had not thought of and I think makes a great argument. For this reason I agree with the con side, although I initially hadn’t, because I think there are more important ways that tax laws should be reformed to benefit everyone.

Overall, I found that I learned a lot through this course and am very happy I decided to take it! Thank you!

Chapter 22 is titled “the short-run trade-off between inflation and unemployment” and introduced the Phillips Curve which shows the short-run trade-off between inflation and employment. This relates to previous topics learned, such as aggregate demand and aggregate supply, by showing combinations of inflation and employment in the short run as shifts in the aggregate demand curve moves along the short-run aggregate-supply curve. The chapter continues to show the relationship in the equation for unemployment rate that equals natural rate of employment minus actual inflation minus expected inflation. Overall the reason why a rise in inflation leads to a rise in unemployment in the short run is because output can be increased which reduces unemployment at the cost of temporarily increasing inflation, for an estimated less than 10 years. The same can be true of lowering inflation at the cost of increasing unemployment and lowering output. In the long run these are unrelated issues because they are fundamentally different; inflation relates to growth in money supply and unemployment relates to the labor market.

Chapter 15 is titled “unemployment” and focuses on how unemployment is defined, measured, and what influences it. There is always a natural rate of unemployment, due to frictional unemployment due to time required for workers to find a suitable job, and structural unemployment due to an insufficient number of jobs available for everyone. There are other factors that influence unemployment and prolong it, such as the job search (affected by public policy and unemployment insurance), minimum-wage laws, unions and efficiency wages.

For the reasons above there will always be some level of unemployment, however there are some influences that increase this rate. For example, a public policy that influences this rate is unemployment insurance which pays employees who have been laid off because their services were no longer required, typically half of their original salary. This is necessary for people to be able to survive without a job, however it also allows for more leisure in the job search process because they have a source of income and are not as desperate to find a job immediately which can negatively affect the economy by increasing the unemployment rate.

Unions are a group of employees who use collective bargaining to obtain certain benefits or conditions. This affects the natural rate of unemployment by raising wages only for the people in the union and can result in other employees being let go as an expense. Human resource regulations have a similar affect because it protects certain employees at the expense of others who may be more costly for the company. These affect the cost of hiring employees in the same way as minimum-wage laws because by paying certain people more, you can’t hire as many people. However many times these regulations are in the best interest of the employees and will consequently be better for the business, allowing for the employees who were let go or not employed to find a new job they are suitable for.

Chapter 4 is titles “the market forces if supply and demand” and is introduces a market as being a group of buyers and sellers of a good or service, and that buyers demand and sellers supply. This lead to the description of the demand and supply curves and the different factors and elements that relate and influence these curves, causing shifts as well as movements along the curves. These curves have an equilibrium point between them which shows when the quantity supplied equals the quantity demanded. This chapter introduced topics such as normal and inferior goods, substitutes, compliments, supply and demand.

In major cities the popularity and uber and lyft have definitely influenced taxi companies by lowering the quantity demanded, and therefore shifting the demand curve to the left. Because the supply is the same this causes the equilibrium of taxis to decrease in both price and quantity. There is another option instead of taxis, however that does not mean there are less taxis and this negatively affects the economy of taxis.

In the town I am from there is a lot of change in the restaurant industry, especially because it is a tourist town and results in off seasons which a lot of companies can’t survive. For this reason most restaurants have a specific niche to be successful. We had a new seafood restaurant, and being that we are in the mountains this was very rare and resulted in an entirely new demand for seafood that wasn’t there before because nobody was properly supplying it. Because they were basically the first and only seafood restaurant in town they could set their own prices since they had all of the quantity, making it very expensive.

A new and growingly popular phenomenon are food delivery services which have relationships with different restaurants, allowing you to order from almost anywhere and have it delivered to where you are. Especially in college this has made things increasingly simple and I know few people who don’t regularly use these apps. This has increased the supply of restaurants that deliver food and therefore have influenced peoples demand of eating in. It has also changed the demand that people have at grocery stores since they are not cooking as much and the demand for in venue dining at restaurants.

Overall, I find this chapter very important as the supply and demand of something is relevant in all of our daily lives and is at the center of what economics is.

Chapter 3 is titled “interdependence and the gains from trade” and proposes how trade allows each of us to specialize in what we do best, specifically based on comparative and absolute advantages. The video “are we better off if we buy local?” focuses on how much of our products that we “buy local” are actually local and how much they actually benefit our community. The argument is that many of the products used to make something locally are outsourced and typically imported and many of the things purchased from the benefits of this product will not be local. Also because of specialization and that not all jobs are necessary everywhere all the time, if communities were confined to themselves it could make some citizens less productive because they wouldn’t be necessary. The same products we have now may not be available, especially at their current prices. The basic argument is that purchases should be made based on taste to make the economy most efficient, and not where they come from.

I will still make an effort to buy local if the option of what I want is available both locally and elsewhere. Although it may cost me more, it also will benefit my community and people who I relate with everyday. My choice to buy local is based on personal relationships from who I buy my products, as well as because many times I believe they are better and better for me by knowing the exact process that they were made.

The video did not make talk about the jobs that buying local maintains and creates. It is beneficial for a community to have a lower rate of unemployment and by building and supporting local businesses it is allowing this to occur. It also did not discuss that buying local can reduce pollution by cutting down on transportation. The produce is also fresher and does not have any preservatives, which therefore make it better for the consumers health as well.

From a Colorado perspective I do believe that trade with Wyoming is different and better than trade with China because it is still from a partially local region by being a part of the United States. In this sense it is benefiting Americans on a federal rather than state level. We pay taxes for these products which benefit our government, and many of the same benefits of local purchases still hold true, such as health for consumer, lower unemployment, and less pollution.

Overall I think this video makes an interesting argument and relates to comparative and absolute advantages of not buying local because other places may have more need for specific jobs or may have better prices. There is some truth to this argument yet there are other benefits to buying local beyond just the economics of it.

Chapter 2 was titled “thinking like an economist” and plays into some of the ways that economics relates to other fields. It began by relating economists to scientists in that they follow a similar system as the scientific method by making observations, which lead to theories and result in observation. They also make assumptions to simplify equations and experiments. The chapter presented two main models, the circular flow diagram and the production possibilities frontier. The chapter continued to describe economists as policy adviser, and explained the difference between normative and positive statements. It concluded by explaining some reasons why economists disagree.

The use of simplified models of the economy helped my understanding because it made it very clear what the relationship between certain variables are and how they directly cause changes to each other. The circular flow diagram made it very clear how firms, markets, and households influence each other based on the flow of inputs and outputs and the flow of dollars. This chart is extremely straight forward and has helped me in other chapters to understand how a certain action influenced others. It is not based on numbers but showing flows into and out of different groups of the economy. The production possibilities frontier shows the combination of outputs that the economy can produce with a slope measuring the opportunity cost between the two outcomes. This is useful because it shows the economy is being efficient and using all available resources if it is on the frontier. Overall, both of these models are useful because they are based on assumptions that can be used as the economy becomes more complicated to simplify it and understand why something is occurring and basically what it means.

Something I believed about the economy before reading this chapter was that the stock market is entirely unpredictable and uncontrollable. This is a positive statement because it is descriptive of how the world is and not how it should be. This matters because it is not a hopeful scenario that the stock market should be unpredictable to make it fair for everyone, yet that if people are participating legally it is.

I found that this chapter was extremely helpful for students who do not think as most economists do to find a way to relate and understand the content. The models were also very helpful for future lessons in the book, to be able to simplify them and recognize that they are based on assumptions to highlight the important variables, yet there are may external forces that influence them.

This chapter served as an introduction to the rest of the course and as an overview to the field of Macro Economics. Titled “The Ten Principles of Economics”, it separates the ten principles into three sections of how trade can make everyone better off, how people interact, and how the economy as a whole works. There are many examples provided, both of everyday life and significant moments in US and global economies, to help the reader recognize the significance and the relatability of these principles to the real world.

This chapter made me think of many economic concepts differently than my previous beliefs. The topics seem to be fairly straight forward and easy to comprehend, and yet the assisting examples give depth to the meanings which resulted in both a better understanding and further curiosity for the principles. For example, while I was aware of what an opportunity cost was, I have always felt challenged defining it. However, when thinking of it in the context of college tuition compared to money that could be made by working a job during that year, a reality that I am currently experiencing as a student, it made the concept much more attainable and easy for me to understand because I can relate to it on a personal level. Furthermore Principle 4 describes that people respond to incentives, which seems fairly straight forward. Yet, the author uses the example of the seat belt law and how it resulted in speeding and less safety for pedestrians, which are implications I had never considered. The author also described economies to have an invisible hand which I find to be a great visual and very helpful, which I have never heard in previous lessons about economics. These examples made the reading more enjoyable and allowed me to put a specific example, or multiple, with each principle to understand it better.

While I felt this chapter did a great job of summarizing the topics and information that will be further developed in the course, there are definitely new questions I have about the US economy based on the reading. My most pressing questions would be concerning efficiency and equality. These concept clearly guide economic decisions, both of the government and individuals, and I am curious exactly how and when these decisions are important, as well as how they guide our everyday choices. I also found that there were positives and negatives to some of the principles and that there is clearly debate surrounding how they can be applied. For example, how inflation causes price to rise in the long-run but a decrease of unemployment in the short-run. This is very interesting to me and I am curious to learn more about this relationship, as well as that between the government and economies in general and the balance they must find.

I look forward to learning more about these topics and now that observing them in the real world, now that I have been introduced to them.