What are the most important things you learned in this The most important thing I learned in this is the lawof supply and demand. I deemed this important because this law governs almost all aspect of our economic lives as it affects the prices of the products and services we buy and avail. Through this law, I understood why some products are expensive due to the share rarity of its supply. I also understood that one man’s expenditure is one man’s earnings. The lesson of globalization or the interrelatedness of economies made me understand the new economic order of how economies are interrelated.
One phenomenon or crisis such as the recent financial crisis can no longer be contained in one country as a crisis in specific countries can have a contagion effect to other countries due to the interrelatedness of economies. It also helped me understand why businesses are outsourcing to China when we have high unemployment rate in the US. They have to cope with competition to have a lower price and better product and this necessity compels them to outsource to China due to the cheap labor cost. Finally, I now have an idea what market forces meant.
I thought that it is such a big word that I will not understand. It is just basically the interplay of supply in demand as manifested in various aspects of our economy. What were your expectations? My first expectation when I took the course is to understand what economics is and how it works. As the subject “macro” implies, to have a view and understanding of the bigger picture of an economy and understand at least how each relate to the other until finally on how it affects me.
My expectations were met because I can now understand when there is news about the US economy. For example, when there is news that we are in recession, I already know what it meant unlike before that had no idea about it. What did you know about economics before you took this course and how this course has changed that? I would cite the interest applied by banks to its borrowers and how the government intervenes through the principles of Keynes (fiscal and monetary policy) save companies and in turn save jobs.
This is relevant to me because there are a lot of people I know who had problem with banks during the financial crisis. Naively, I blurted then why banks have to apply steep interest when people are losing their jobs. I thought then that banks are made of cruel people who are out to give other people hard time.
Now I understand that interest is cost of money, that money itself is a good that when availed through loan has its accompanying cost in the form of interest. Government can influence this interest by putting in more money in the system to lower interest rate (supply in demand, more supply of money, price will be reduced) or restrict it to increase interest. I thought before we are becoming a socialist before where government will take over business when government put moneys in corporations. I now understand why government has to put in money in companies to save it and save the jobs.
If they will shut down, more people will have no jobs and it will have a contagion effect in the economy. Which topic(s) have you found most interesting and which one(s) least interesting throughout the semester and why? Globalization interested me most. I often hear it before but I did not understand it fully. Now, I can even say that I understand even the principles of globalization that animates it which is David Ricardo’s principle of comparative advantage that in the long run, economies will become more efficient if they take will focus on products that they do best because they can produce it at the least cost and therefore will sell it the cheapest.
In effect, this benefits the consumer because products and services are now made and rendered more efficiently with higher quality. Also, the lesson about government expenditure to pump prime the economy interested me because it is eye opening. I thought then that government is extravagant not knowing that such expenditures were necessary to pump the economy.
The principle at work here is that one man’s expenditure is another man’s earnings and this will have a bandwagon effect because that man will in turn spend his money. The lesson that I find least interesting is the lesson about GDP. I know that they are the sum of the products and services in a given economy but I just cannot make any use out it.