Aaron Marcus Period 7

Mr. Sassone AP Economics Summer Assignment Part 1

Employment
Employment focuses on both the state and national numbers of employed people.
These totals can determine if the labor market is doing well. Recently employment
numbers have been positive. Over the last 12 months, the average monthly jobs gain was
209,000, and the unemployment rate is now 1.1 percentage points lower than it was a
year ago (Lee, 1). The employment topic is also a topic of politics. Democrats, with a
their partys president in the white house, ride the positive and show that the employment
numbers are good. Republicans on the other hand have an argument against this.
Republicans are sticking with the message that a declining unemployment rate fails to
show that too many discouraged Americans are still looking for work (Lee, 1). Their
argument is that some people have become so discouraged with looking for work; they
have stopped looking for jobs. This is a possibility because this does affect the numbers
of employment. Despite this, unemployment rates have lowered in recent times. With
the jobless rate steadily declining over the last year and economists predicting job growth
to average around 200,000 over the rest of the year, the message that the recovery is
going nowhere has begun to lose some of its potency (Lee, 1). Employment is a very
significant part of the United States and even world economy. Recently the economy has
been improving compared to the dip in 2008. The July jobs report also capped a solid
week of economic newsgross domestic product grew at an annual rate of 4 percent in
the second quarter of this year far surpassing expectationsThe Federal
Reservenoted that economic activity had rebounded this spring (Lee, 1).
Income
Income is a very important part of the economy. All people have different
varieties of income. Many worry that the difference in income among people is not fair
and it may lead to a serious economic problem. Over the next decade, S&P forecasts
that the economy will expand at just a 2.5 percent annual rate, a downgrade from the 2.8
percent growth it predicted just five years ago. One explanation: at extreme levels,
income inequality can harm sustained economic growth over long periods. The US is
approaching that threshold. (Quandt, 1). One issue with income is that the gap between
the rich and the poor has been increasing in the past few decades. The rich live in wealthy
housing and save money while the poor struggle to stay afloat. S&P warns against
drastic changes to the tax code, arguing that heavy taxation solely to equalize wages may
reduce incentives to work or hire more workersPolicymakers should take care,
however, to avoid policies and practices that are either too heavy handed or foster an
unchecked widening of the wealth gap. Extreme approaches on either side would stunt
GDP growth. (Quandt, 1). Although the gap between the rich and the poor could be
detrimental, current policies such as taxing can also create unequal distribution of wealth
when it is trying to fix the issue. One possible way the issue can be fixed is an extra year
of education for the American workforce. S&P suggests focusing on education to
increase national productivity. According to the report, one additional year of education
in the American workforce could increase GDP by $525 billionabout a 2.4 percent
boostover the next five years. (Quandt, 1). Income is an extremely important part of
the United States economy and it has becoming a key topic in political argument and
government policy. This topic will continue to be a key economic discussion.
International
The international economy is dependent on each country in the world. It is
measured through countries imports and exports. All countries play a big part in
improving the international economy. Lou pointed out that the U.S. economy shrank at a
2.9 percent annual rate from January to March largely because of a brutal winter
and said China hopes the U.S. can take measures to ensure the momentum of growth.
(Watt, 1). This shows that other countries are concerned with other countries economic
status. All countries trade with one another and if a country is struggling it will directly
affect the other country. For example, Lou, Chinas Minister of Finance, is concerned
over the United States economic status. He also said China hopes the U.S. can
rebalance its economy by encouraging Americans to save more (Watt, 1). International
economy is important because it is an indication of the success of the world. It is also
important because it shows how countries can work together to benefit from each other
and create a worldwide network of trading. International comparisons also show the
competition between countries. At the same time as countries want to benefit the world,
they are competing with one another for better labor, prices, and profit. Chinas finance
minister said Wednesday that the country is not planning any new stimulus measures and
it is up to the United States to drive the global economy. Lou Jiwei said that leaders are
satisfied with the countrys economic performance so far this year and that in the first
five months China had created up to 6 million jobs, 60 percent of this years target
(Watt, 1). The international economy is important to the United States economy because
all other countries economies affect the United States economy.
Money
Money is a significant part of the economy. Another big retailer has started
accepting Bitcoin. This time it's online computer and software seller Newegg. In addition
to buying gadgets on Newegg.com, you can use bitcoins to book travel with Expedia
(EXPE), CheapAir and Virgin Galactic; subscribe to Dish Network (DISH) or the
Chicago Sun-Times; shop on Overstock (OSTK), TigerDirect and buy tickets to the
Sacramento Kings or San Jose Quakes (Pagliery, 1). What is bitcoin? It is a new
currency that does not need a bank as the middleman. The government does not trust
bitcoin because it is mostly unregulated and it is hard to trace people who make bitcoin
exchanges. Bitcoin cannot be taxed either.
The benefits of bitcoin are that it is easy to use and make purchases with. Newegg
has started to accept bitcoin. They accept Bitcoin payments, because they are cheaper to
process than credit card and PayPal payments. But they are wary of hanging onto the
volatile currency for too long. It shows Bitcoin -- or something like it -- has a promising
future as a back end payment system (Pagliery, 1). Money is an important part of the
economy. In the United States the circulation of currency is very important because the
more money in circulation, the less amount of value American money has. Bitcoin does
not face the same issue so bitcoin will not lose its value. Money is a very important part
of the economy.

Output (GDP)
A key part of a countrys economy is the Gross Domestic Product (GDP). It
measures the entire countrys output. The U.S. economy picked up steam in the
second quarter with GDP coming in much stronger than expected. On Wednesday, the
Bureau of Economic Analysis released its advance estimate of real gross domestic
product for the second quarter of 2014 covering April, May and June of this year. The
release showed output in the U.S. increasing at an annual rate of 4%. This is relative to
the first quarter when real GDP declined 2.1% (an improvement from a previous estimate
which showed a 2.9% decline) (Sharf, 1). In recent years the GDP numbers have
increased for the United States, which demonstrates that the U.S. economy is improving
as well. The increase in real GDP was largely due to growing personal consumption
expenditure, private inventory investment, exports, nonresidential fixed investment, state
and local government spending and residential fixed investment (Sharf, 1). The United
States contribution to the world with its output in production and trading is substantial to
international, economic success. Jim Baird, chief investment officer atPlante Moran
Financial Advisors, pointed out in a note that gains were widespread. Noting, Whether
or not the economy can break out of its sub-par growth pace of the last few years remains
to be seen, but stronger job creation and surging confidence are positive signs (Sharf,
1). A countrys Gross Domestic Product is vital to their economy and to their output. In
the second quarter, after a poor output in the first quarter, the United States economy
picked up. This shows that an economy can improve through certain ways. Output is very
important for every country and it is a significant indication of a countrys economy.
Prices
Gas is a very important part of everyday life. Almost everyone uses gas.
Thousands of cars use gallons upon gallons of gas each day. The price of gas has always
been important but in recent years the price for gas has increased almost exponentially.
At one point gas was ten cents per gallon and now it is almost four dollars per gallon. But
in recent times, gas prices have actually been declining. As of July 31, the AAA Fuel
Gauge Report listed the national average for a gallon of regular at $3.517, roughly 3 less
than a week ago, 16 less than one month ago, and 11 less than prices at the pump at
this time last year. Whats more, AAA announced that gas prices fell in 30 out of 31 days
in July, helping to bring about the biggest decline in prices at the pump in July in six
years (Tuttle, 1). Usually in this time of year, gas prices soar to their maximum, but this
year they steadily declined. The highest national average ever posted remains July 2008,
when prices spiked to a panic-inducing $4.11 (Tuttle, 1). Prices usually go up or down
depending on the supply and demand. Oil and gas have a very high demand but a limited
supply so therefore prices go up when oil is in low supply. Gas prices will always
continue to fluctuate but the numbers will probably be going up rather than down because
oil is a finite resource and some say we are running out of it. Eventually there wont be
any more oil, which creates a problem for car users. Even so, the experts at AAA
anticipate that gas prices will continue on a downward path in the days and weeks ahead,
provided there are no major hurricanes, refinery problems, or unforeseen international
conflictsany of which could send fuel costs up and up. For now at least, the idea that
gas prices peaked for 2014 in early spring is still holding up (Tuttle, 1).
Production
Productivity and related cost measures are designed for use in economic analysis
and public and private policy planning. The data are used to forecast and analyze changes
in prices, wages, and technology. Productivity in the April-June quarter increased 2.5%,
compared with a revised 4.5% drop in the prior quarter, according to a preliminary
reading by the Labor Department. The first-quarter reading was the lowest since the
fourth quarter of 1981. Economists polled by MarketWatch had expected a 1.7% gain in
productivity in the second quarter. Higher productivity is regarded as the key to a rising
standard of living over time because it tends to lead to higher pay for workers and larger
profits for companies (Robb, 1). Productivity is an important part to the United States
economy because efficiency can save and make more money. In the short run, though,
many factors can affect productivity. One of the reasons productivity has been subdued in
recent quarters is because hiring in the U.S. has been strong. After a cold weather-
ravaged first quarter, companies produced more in the spring. Output of goods and
services increased 5.2% during the April-June period after a 2.4% drop in the prior three
months (Robb, 1). Greater productivity will lead to more output by the United States on
the whole. Productivity is increased with a greater workforce in numbers and skill.
Productivity data is revised several times and sometimes the changes are large. On a
year-on-year basis, productivity was up 1.2% in the second quarter, up from a 0.7% rate
in the first quarter but still below the historical average closer to 2% (Robb, 1).
Productivity is a key part of the United States economy and in order to be successful,
businesses and the United States as a whole have to be efficient and productive.
Pay and Benefits
Pay and benefits can vary for different geographic areas, the occupation, and the
industry. And in some cases the difference can be because of age or union membership.
For example employees in Michigan receive health plans like many other employees in
all states. Health plans for state employees in Michigan are more generous compared to
the average for state workers nationally, a new report shows. Premiums are also lower,
but employees whose plans cover just themselves pay a greater share of the premium cost
than their counterparts nationally while employees who have dependents on their plans
pay a smaller share than the average. Those are some of the ways Michigan stands out in
the first state-by-state comparison of public employee health plans conducted for the Pew
Charitable Trusts and the John D. and Catherine T. MacArthur Foundation (Groppe, 1).
Depending on what state and what occupation, an employee receives different benefits
and pay. For example, Michigan did not offer as some states did a plan with a
deductible of at least $1,500 for individual coverage last year. And nearly half the
Michigan employees covered by a state plan chose one with no deductible. By contrast,
90 percent of people covered by a state employee health plan in Indiana had a deductible
of at least $1,500 (Groppe, 1). Different pay and benefits may cause some workers to
seek job opportunities in different states. For example, police officers and teachers get
paid relatively well in New York, which brings many people in those fields of work to
New York. Another benefit that differs is insurance. For example, Michigan employees
receive more generous health benefits. All states enact different policies and have
different pay and benefits.
Works Cited
Groppe, Maureen. "State Employee Health Benefits More Generous in Michigan."
Lansing State Journal. Gennett Washington Bureau, 20 Aug. 2014. Web. 22 Aug.
2014.
<http://www.lansingstatejournal.com/article/20140819/NEWS01/308190052/State-
employee-health-benefits-more-generous-Michigan>.
Lee, MJ. "Employment Report Shows Jobs Growing at Steady pace." POLITICO. 1 Aug.
2014. Web. 09 Aug. 2014. <http://www.politico.com/story/2014/08/july-2014-
unemployement-numbers-109631.html>.
Pagliery, Jose. "Bitcoin Is a PayPal Competitor." CNNMoney. Cable News Network, 01
July 2014. Web. 3 July 2014.
<http://money.cnn.com/2014/07/01/technology/bitcoin-paypal/>.
Quandt, Katie R. "Even Wall Street Thinks Income Inequality Could "capsize" the
Economy." Mother Jones. 6 Aug. 2014. Web. 08 Aug. 2014.
<http://www.motherjones.com/mojo/2014/08/income-inequality-damaging-
economy-says-new-report>.
Robb, Greg. "Labor Productivity Improves 2.5% in Second Quarter." MarketWatch. N.p.,
8 Aug. 2014. Web. 22 Aug. 2014. <http://www.marketwatch.com/story/labor-
productivity-improves-25-in-second-quarter-2014-08-08>
Sharf, Samantha. "U.S. GDP Grew 4% In The Second Quarter 2014." Forbes. Forbes
Magazine, 30 July 2014. Web. 1 Aug. 2014.
<http://www.forbes.com/sites/samanthasharf/2014/07/30/u-s-gdp-grew-4-in-
the-second-quarter-2014/>.
Tuttle, Brad. "Gas Prices Dropped 30 Out of 31 Days in July." Time. Time, 31 July 2014.
Web. 1 Aug. 2014. <http://time.com/money/3063936/gas-prices-july-2014-
summer/>.
Watt, Louise. "China Says It's up to US to Drive Global Economy - Southtown Star."
China Says It's up to US to Drive Global Economy - Southtown Star. 9 July
2014. Web. 9 July 2014.
<http://southtownstar.suntimes.com/business/28561998-420/china-says-its-up-
to-us-to-drive-global-economy.html#.U9gD87-vv-Y>.