ALL THINGS BIG AND SMALL 2.0

I believe that everybody-and that includes your kids-should have some basic knowledge of economics and be financially literate. Else you are at a disadvantage in today's world. * for the full .pdf document you can email me and I will send to you. Lesson 1: What is GDP (Gross Domestic Product) * We use the US economy as our case study. And the data source is FRED (US Federal Reserve Education Department) GDP — Gross Domestic Product — is the total value of everything a country makes and sells in a year: every burger, haircut, movie ticket, house, and computer chip. It's the best single number we have for measuring the size of an economy. Right now, the US economy produces goods and services at a pace of about $31.9 trillion per year — that's $31,900,000,000,000! Economists count GDP by adding up four kinds of spending. The equation looks like this: GDP = C + I + G + (X - M) . See attached Table 1 for what this equation means. Now let's plug the real numbers into the equ...

At every Fed meeting, whether Bernanke raises interest rate or not depends on whether he thinks there is Inflation. Understanding Bernanke means understanding clearly the concepts of Inflation, Economic Growth and Productivity. And so What’s Hot for this week features a short lesson on Inflation, Economic Growth and Productivity. Inflation happens in an Economy when Price growth outstrips Output growth, resulting in spiraling prices [including spiraling wages, the price of Labor], and loss of incentive to work and save as costs living became unmanageable. Extreme cases of inflation [such as sometimes happens in third world countries like Zimbabwe or Indonesia] will mean you have to carry a wheelbarrow full of notes to Wal-Mart. And you would not want to keep money in the bank or under the bed when you know $1 will be worth less than $1 tomorrow. One way Inflation can happen is when the rate of Productivity growth is less than the rate of Economic Growth. Simplified Example: There is a ...