Leading - These types of indicators signal future events. Think of how the amber traffic light indicates the coming of the red light. In the world of finance, leading indicators work the same way but are less accurate than the street light. Bond yields are thought to be a good leading indicator of the stock market because bond traders anticipate and speculate trends in the economy (even though they aren't always right). Lagging - A lagging indicator is one that follows an event. Back to our traffic light example: the amber light is a lagging indicator for the green light because amber trails green. The importance of a lagging indicator is its ability to confirm that a pattern is occurring or about to occur. Unemployment is one of the most popular lagging indicators. If the unemployment rate is rising, it indicates that the economy has been doing poorly. Coincident - These indicators occur at approximately the same time as the conditions they signify. In our traffic light example, the green light would be a coincidental indicator of the associated pedestrian walk signal. Rather than predicting future events, these types of indicators change at the same time as the economy or stock market. Personal income is a coincidental indicator for the economy: high personal income rates will coincide with a strong economy.
Top Indicators:
-Leading: Stock Market declining
-Lagging: Unemployment Rate
-Coincident: Gross Domestic Product
Monday, January 3, 2011
Wednesday, December 22, 2010
Post 14 - Reaction to a youtube video – “My Humps” and the Business Cycle Rap Then watch this Qwiki Find a link to a better video or website for Business cycles. Was the video helpful or silly? Which source was more useful why?
The video "My humps" was a bad idea at first. I think we were more focused on a bunch of high school kids making a bad rap at first. But after we started to listen to the lyrics we could see that the students knew what they were talking about. After we got past the looks and actually listened the video was pretty helpful.
Post 13 - Practice quizzes! Explain the 10 things you learned or things that got "cleared up for you"
1. Economists track things using "National Income Accounting"
2. To calculate GDP economists use output-expenditure model
3. Indirect Taxes are included in final tax price
4. There is a seperate economy called the underground economy
5. A business cycle is just a market fluctuation
6. The great depression was the most severe contraction in the American Economy
7. War is considered an external factor
8. Economic Growth is essential to prosperity
9. US does not have to import lumber or coal, only oil
10. American productivity growth has slowed down since the 60's
2. To calculate GDP economists use output-expenditure model
3. Indirect Taxes are included in final tax price
4. There is a seperate economy called the underground economy
5. A business cycle is just a market fluctuation
6. The great depression was the most severe contraction in the American Economy
7. War is considered an external factor
8. Economic Growth is essential to prosperity
9. US does not have to import lumber or coal, only oil
10. American productivity growth has slowed down since the 60's
Monday, December 20, 2010
Post 12 - write a letter to the editor why the GDP is a faulty indicator – suggest other indicators (GNP, NNP etc)
To whom it may concern:
After researching the Gross Domestic Product, it seems that a few problems have come up. It seems that some certain areas used to calculate the GDP are not safe, or correct. Things such as divorce, natural disasters, and crime are all counted as economic gain? I dont believe this is a morally right way to calculate the GDP. Not only does the GDP promote these things but it also ignores the non-market economy of household and community. I believe if there was some way to switch these situations than we would be much better off.
After researching the Gross Domestic Product, it seems that a few problems have come up. It seems that some certain areas used to calculate the GDP are not safe, or correct. Things such as divorce, natural disasters, and crime are all counted as economic gain? I dont believe this is a morally right way to calculate the GDP. Not only does the GDP promote these things but it also ignores the non-market economy of household and community. I believe if there was some way to switch these situations than we would be much better off.
Post 11 - Using the 4x3technique. 3 rules and 4 ingredients create a recipe or math formula that explains how GDP is calculated!
Equation:
RULES:
Wealth distribution–GDP does not take disparity in incomes between the rich and poor into account.
Post 10 - React to reading: What do you think macroeconomics will be all about? What interests you about this topic? List three things you hope to learn!
Ive learned prior that macroeconomics has to do with business on a larger scale, much like how microeconomics has to do with business on a smaller scale. I think we will take a look at big business in the United States, as well as across the world. I hope to learn about some of these specific businesses, and how they function. I would also like to find out if they had started on a smaller scale than expanded. A neat thing would be to see how other nations economic well being is handled, I would like to know if they are similar to that of the United States, or completely different.
Post 9 - Tween Tribune 100 word essay
Technology has helped us in our lives in many ways. We now are able to produce products better and faster. Instead of companies having shortages of their products they can now easily produce their products to the demand of the people. Technology has also helped the expansion of companies because they can communicate with each other from anywhere in the country that the company is located, or to other countries as well. Companies can now receive information/reviews about their products, which could lead to a decision to increase production or lower it. This new technology has help companies become more successful everyday.
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