Economic Goal Analyze GDP and its limitations in measuring economic well being.
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Economic Goal
Analyze GDP and its limitations in measuring economic well being.
Initial Discussion Post
Respond to the following prompts in a post with a minimum of 200 words.
Gross Domestic Product was designed as a measure of economic activity, specifically a measure of national production. Despite this intent, GDP is widely interpreted as a measure of economic welfare or standard of living (when measured in per capita terms).
What are the shortcomings of using GDP as a measure of economic welfare?
What would you like to add to (or subtract from) GDP to make it a better reflection of how well people are doing in a nation?
Do we have other measures of economic well being? 2.Goal
Interpret the AD-AS Model.
Initial Discussion Post
Respond to the following prompts in a post with a minimum of 200 words.
While over the long run, the economy grows about 2 to 3% per year on average, over the shorter term, the economy goes through business cycles.
Think about the growth rate of GDP, the inflation rate, and the unemployment rate over the last 6 to 8 quarters. Once you’ve looked at the data (BEA, BLS, Beige Book) can you draw conclusions about the state of the economy?
Would you describe the economy as booming, recovering, or in recession during the last few years? Why? Use the AD-AS model to support your answer. Which curve do you think caused the change?
3.Goal
Compare and contrast Keynesian and NeoClassical Perspectives.
Initial Discussion Post
Respond to the following prompts in a post with a minimum of 200 words.
Thinking back to the business cycle discussion, how would Keynesian economists explain the performance of the economy during the last few years? What has happened to aggregate demand?
Next, how would neoclassical economists explain the performance of the economy during the last few years? What has happened to aggregate supply?
Evaluate the evidence and decide which interpretation (Keynesian? Neoclassical? Both? Neither?) makes the most sense to you.
Briefly discuss your reasoning.
4.Goal
Analyze rational thinking, behavioral economics, financial bubbles.
Initial Discussion Post
Respond to the following prompts in a post with a minimum of 200 words.
How long does it take for wages and prices to adjust, and for the economy to rebound back to its potential GDP? This subject is highly contentious. Keynesian economists argue that if the adjustment from recession to potential GDP takes a very long time, then neoclassical theory may be more hypothetical than practical. In response to those immortal words of John Maynard Keynes, “In the long run we are all dead,” (implying it is impractical to wait for the economy to fix itself) neoclassical economists would say that even if the adjustment takes as long as ten years, the neoclassical perspective remains of central importance in understanding the economy. One subset of neoclassical economists holds that the adjustment of wages and prices in the macroeconomy might be quite rapid indeed. The theory of rational expectations holds that people form the most accurate possible expectations about the future that they can, using all information available to them.
In an economy where most people have rational expectations, economic adjustments may happen very quickly. Do you think markets can be rational when humans aren’t?
Useful Documentary. Mind over Money . In the aftermath of the worst financial crisis since the Great Depression, NOVA presents “Mind over Money”—an entertaining and penetrating exploration of why mainstream economists failed to predict the crash of 2008 and why we so often make irrational financial decisions. The program reveals how our emotions interfere with our decision-making and explores controversial new arguments about the world of finance. In the face of the recent crash, can a new science that aims to incorporate human psychology into finance—behavioral economics—help us make better financial decisions?
Grading / Rubric Your post will be reviewed and evaluated with assigned rubric. Click the snowman icon (3 vertical dots), then select “Show Rubric.” Mobile users: Click Grades, then click into the Discussion. The rubric can then be found on the Grades tab.
