I use this great satellite photo to introduce types of economic systems. Usually get students to write down what they understand by the photo. You should get a range of answers from – “they have no nighlife in North Korea” to “North Korea has a controlled economic system and it is blacked out from failure of the electrical grid”.
I got the image from the book Nothing to Envy: Ordinary Lives in North Korea. The book looks at the lives of six defectors from the repressive totalitarian regime of the Republic of North Korea and how it collapsed catastrophically into poverty, darkness, and starvation under the dictator’s son, Kim Jong Il.
Here is some revision material on economic systems. It goes through the features of the market, command and mixed economies. Below is a screenshot of the information but you can download the word document by clicking on the link – ECONOMIC SYSTEMS.
In many economic commentaries that students read the letters OECD frequently come up. So what is the OECD? Grant Cleland and Emma Doherty produced a useful summary in the Parliamentary Economic Review.
The Organisation for Economic Co-operation and Development (OECD) was established in 1961, and has its headquarters in Paris, France. It has the mission of promoting “policies that will improve the economic and social wellbeing of people around the world”. The organisation provides a forum in which governments can share experiences and understanding in order to develop and promote policies designed to improve the quality of people’s lives.
The OECD collects and makes available a broad range of social and economic indicators, which allow member countries to compare their figures with other countries. Examples of these include unemployment rates, employment outlooks, health statistics, GDP and GDP per capita (i.e. New Zealand’s GDP per capita of US$32,117 in 2012 was ranked 20th in the OECD).
The OECD publishes a wide range of economic surveys, working papers, and reports on various topics of interest to member countries. These allow for the comparison of policies and statistics between OECD member countries (and some non-OECD member countries). OECD publications include:
– Consumption tax trends.
– Taxing wages.
– Government revenue statistics.
– The Programme for International Student Assessment (PISA).
– Pensions at a glance.
The OECD’s 2014 budget is 357 million Euros (€357m), with funding coming from its member countries. Funding is split into two halves.
The first part (Part I programmes), which accounts for around 53 percent of the budget, is based on the size of the members economy. The United States contributes 21.2 percent of Part I funding, followed by Japan (12.86 percent). New Zealand’s contribution to Part I funding is 0.82 percent.
Part II programmes are those that are of interest to a limited number of OECD members or special sectors not covered by Part I. These Part II programmes are funded according to a scale of contributions or other agreements between participating countries.
Will Self called John Lanchester’s previous book on money and banking – the bestselling ‘Whoops!’ – as ‘the routemap to the crazed world of contemporary finance we’ve all been waiting for’. If ‘Whoops!’ was the routemap, then his new book ‘How to Speak Money’ is the phrasebook. It shows you that it’s possible to learn to speak the language of money. Possible, desirable and perhaps even necessary if we’re to avoid feelings of complete helplessness and bafflement when confronted with the big financial forces that shape our lives.
The Economist produced an interesting Daily Chart looking at the Opportunity Cost of watching the Gangnam Style video. Earlier this year the music video surpassed two billion views on YouTube making it the most watched clip of all time. At 4:12 minutes, that equates to more than 140m hours, or more than 16,000 years.
What is the opportunity cost of watching this video i.e. the other achievements that were foregone.
* 3 “supercarriers” like the USS Gerald Ford built last year
* 4 Great Pyramids of Giza,
* 1 more Wikipedia,
* 6 Burj Khalifas in Dubai (the world’s tallest building).
The song’s nearest rival is Justin Bieber’s “Baby” – one billion views. The opportunity cost of watching PSY’s frivolity is huge, but humanity has at least been entertained.
Been doing some more revision courses on CIE AS economics and went through how the elasticity of demand varies along a demand curve. Notice in Case A that the fall in price from Pa to Pb causes the the total revenue to increase therefore it is elastic – the blue area (-) is less than the orange area (+). In Case B the opposite applies – as the price decreases from Pa to Pb the total revenue decreases therefore it is inelastic – the blue area (-) is greater than the orange area (+). In Case C the drop in price causes the same proportionate change in quantity demanded, therefore there is no change in total revenue – it is unitary elasticity. Remember where MR = 0 – PED = 1 on the demand curve (AR curve).
With mock exams this week here is a revision note on Keynes 45˚ line. A popular multi-choice question and usually in one part of an essay. Make sure that you are aware of the following;
1. C and S are NOT parallel
2. The income level at which Y=C is NOT the equilibrium level of Y which occurs where AMD crosses the 45˚ line.
1. OA is autonomous consumption.
2. Any consumption up to C=Y must be financed.
3. At OX1 all income is spent
4. At OB consumption = BQ and saving= PQ
5. Equilibrium level of Y shown in 2 ways
a) where AMD crosses 45˚ line
b) Planned S = Planned I – point D
Remember the following equilibriums:
2 sector – S=I
With Govt – S+T = I+G
With Govt and Trade – S+T+M = I+G+X