Friday, January 29, 2010

Financial LIteracy Skills

Summary: Intereactive game.

Financial Football is a joint effort of Visa and the National Football League to help teach financial concepts with Financial Football, a fast-paced, interactive game that engages students while teaching them money management skills. Teams compete by answering financial questions to earn yardage and score touchdowns. Easier questions earn less yardage. HT to Konrad Wilke.





About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is also an EconEdLink.org author.
Wednesday, January 27, 2010

Haiti Lesson Plan

Summary: Mr. Welker's blog.

This blog is poignant. It is filled with facts, resources, links, and discussion questions following the devastating eartquake in Haiti. I read that donations for Haiti top $200,000 and hour.





About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA.

Recessions and Educational Attainment

Summary: Insulating effects of education.

In a paper, The Effects of Recessions Across Demographic Groups, St. Louis FED economist Howard J. Wall concludes that the higher the educational attainment, the less likely the person will have lost their job during a recession. The paper is here.

There's no doubt in my mind that education is a compensating wage differential. I was wondering how many educated worked have also signed long-term contracts that protect employees from job loss and real buying power. In addition, sales jobs seem to be booming. I think some industries will suffer from the recession after inventories have been depleted and contracts have expired.

The message is clear, however, education is the key to success.







About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author blogging at Mikeroeconomics.

Sunday, January 24, 2010

Two-Minute Drill -- CPI and Inflation Rate

Summary: Calculate the inflation rate.

Assume that you are given data on the Consumer Price Index for four years. in 2006, 100; 2007, 110; 2008, 119.1; and 2009, 114.9. Calculate the inflation rate for 2007, 2008, and 2009.

My answers respectively are: 10%, 9.1%, and -4.2%.

Extra Credit. What is the real interest rate in 2009 if the nominal interest rate is 8%

Usually in AP Macroeconomics we exclude food and energy from the index since these items are volatile. I think a more accuate measure of prices would be to include all good for urban consumers since that would eliminate rural monopolies? I welcome your thoughts.







About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is also an EconEdLink.org author.
Thursday, January 21, 2010

Interactive Game for AP Economics

Summary: Peanuts and Crackerjacks.

The Richmond Fed has a fun game that combines baseball with economics. The game is here.

Do you think games aid in learning?





About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author.
Wednesday, January 20, 2010

NBER Business Cycle Dates and Duration

Summary: AP Macroeconomics data for business cycle analysis.

Is the current recession typical? How long does a recession usually last? The National Bureau of Economic Research dates the recession from peak to trough. The link is here.

Using this data, can you determine the shortest recession from peak to peak? How about the shortest recession from trough to trough? The longest post WWII recession I found lasted 128 months. For those economists who like to research, do prices ALWAYS fall during a recession?





About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author blogging at Mikeroeconomics.

Powell Center for Economic Literacy

Summary: Lesson Plans. Infusionomics.

The Powell Center for Economic Literacy is a wealth of economic resources. There are lesson plans, teacher and student programs. The latest addition it a three-year program to infuse economics into every day thinking. A link to Infusionomics is here.

I highly endorse Infusionomics. Economics is tool to help analyze and make decisions. Infusionomics integrates the economic way of thinking into daily decisions. This is the goal of economic instruction.

Later this year, the Richmond Federal Reserve Bank will host a Sunday night conference sponsored by the Powell Center. Details will emerge later.








About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA.

Did You Know--Video




This video was shown at my faculty inservice last Monday. I was left with the question, "Is globalization simply technological innovation?"

Suppose that you use Skype to hire workers in India to complete income tax forms. Isn't that choice more a technological innovation than an educational advantage? When I think of global competition, I think of markets where the prices are driven to their marginal cost. I can only see that equilibrium condition happening because of technology evens the playing field.

About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author, and also publishes the Mikeroeconomics.

Inflation Articles for AP Macroeconomics



Summary: Mankiw. Kliesen.



Is inflation the next dragon to slay? The answer is in the Regional Economist. An 11-minute video discussing the article by Economist Kevin L. Kliesen is here.



Mr. Mankiw's New York Times Article is here.

To see the M2 money supply, use FRED data base series, M2.

Extra credit. Why is deflation a problem? Why is the M2 money aggregate used instead of the M1?









About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author, and also publishes the Mikeroeconomics and iMacroeconomics VB blogs.
Sunday, January 17, 2010

Types of Unemployment

Summary: What kind of unemployment is described or inferred?

Take this quiz. Identify each scenerio as "F" for frictional, "S" for structural, "C" for cyclical, or "N" for nonsense.

1. Juan, a teacher, loses his job as the economy slumps into a recession.

2. Zeglin's Appliances pay their workers an efficieny wage.

3. Workers in a drive-thru McDonalds lose their jobs as automation outsources orders to India.

4. Bill, using the Internet, finds a higher paying job in Idaho and leaves his job at Frank's Fabulous Franks.

5. A hike in the minimum wages puts thousands of teenagers out of work.

My answers in order are: C, S, S, F, S.







About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA.

US Debt Clock

Summary: Debt Clock.

The debt clock is here. Roll over a catagory to see how it was calculated and defined.

In percent, what is the debt to GDP ratio? Is it possible for a country to have a debt to GDP ratio greater than 1? According to the debt clock, is there any area where revenues are greater than expenses? Using the data for the labor force and number unemployed, what is the unemployment rate? What item composes the largest budget item? Capital inflows occur when an economy is running a current account deficit. How much of US financial and real assets held by foreigners?

In AP Macroeconomics, make sure students know the difference between the national debt and the budget deficit.





About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author, and also publishes the Mikeroeconomics and iMacroeconomics VB blogs.
Saturday, January 16, 2010

Lecture Kaizen to Develop Critical Thinking Skills

Summary: Zen master offers advice--lie.

Try this to improve your lectures in AP Macroeconomics.

The focus at my school is on instructional improvement. One area that we are trying to focus on is moving to a level of rigor and relevance. This involves having students use higher order thinking skills, HOTS. Using strategies that requires students to evaluate information is rigor in the Rigor-Relevance Model. I have found that asking higher order questions in daily conversations makes you more interesting and vibrant to be around. Let me end with this question:

Given the disaster in Haiti, compare how classical and Keynesian economists will view the recovery.







About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author.
Friday, January 15, 2010

Stock Market Simulation

Summary: Buy high. Sell Low.

Many AP Macroeconomics teachers recommend The Virtual Stock Exchange as a simulation. Veteran teachers recommend setting ground rules before the game begins such as the number of trades that must be made each week, no short selling, or buying on margin. Perhaps students have to spend at least 50% of their portfolio.

I am a believer of the efficient market hypothesis so I don't get excited about stock market simulations. But could you use the stock market asset valuations to show the nominal money demand? If a stock is returning 15%, do students allocate more of their portfolio to stocks and chose to hold less in liquid assets? Does an increase in stock valuations increase consumer wealth and move aggregate demand? Are stock prices out of line with dividends?

How do you use the stock market in your class?







About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, Iowa. He is an EconEdLink.org author and blogs Mikeroeconomics.

Thursday, January 14, 2010

Multimedia Planning Tool

Summary: Tool allows lesson plans to include multimedia.




Do you include videos, sound clips, and web links in your lessons? Learning Score has a tool that will help you plan integration. The planner uses a music score metaphor to show lesson plan progression. A demo can be downloaded for a 14-day trial.

As technology finds more paths into the classroom, lessons are changing in both delivery channels and retrieval. I have found that I can present more without using paper handouts. What methods do you use to plan for multimedia in your classes?

About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA.

Wednesday, January 13, 2010

Where's the Economics?



Summary: Real interest rate.

There are many interest rates in the economy, but they all move together. The nominal interest rate is expressed as a percent on savings accounts, money markets accounts, and securities. In this graphic, I show the price of goods and services deflated into 2005 dollars. What is the difference between the real GDP and the nominal interest rate?

The difference has to be expected inflation. In AP Macroeconomics, the real interest rate, r, is found by subtracting the expected rate of inflation from the nominal interest rate, i. Adding the real interest rate to the expected rate of inflation would equal the nominal interest rate. The image above can be enlarged simply by clicking on it.

How do you form inflationary expectations? Suppose you see the Central Bank increasing the money supply. Assuming that output is constant at the natural rate of unemployment, you would assume that the price level would increase. If the money supply is constant, then consumers will demand more money and interest rates will rise. This is the Fisher Effect.











About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA.
Tuesday, January 12, 2010

Where's The Economics?

Summary: Find the theory in this riddle.

Professor Denhart used to be an energetic and innovative teacher when he was hired at MBU. Professor Denhart would get to school early to prepare original lessons that developed higher level thinking skills in his students. He would make economic simulations that lead to discovery. His games on the economics of auctions was published. In addition, we would have after contract hours study groups in his home. All of his students loved him. After eight years, he became a tenured professor.

When he earned his tenure, Professor Denhart concentrated on his research. He relied on his old lessons and refused to work outside of class with students. Often, he would be unprepared for class and was impatient with his students. After he received tenure, Professor Denhart's behavior changed. What term would describe Professor Denhart's behavior?

Since his behavior changed after he received tenure, I would describe his behavior as a moral hazard. His teaching became marginal since he could not be fired. In AP Microeconomics, this might fall under the umbellra of market failure. Just like seatbelts might cause someone to drive more carelessly or diet pills might cause someone to eat more junk food, a moral hazard occurs when goals are misaligned.

What moral hazard examples do you use in your classes?







About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author blogging at Mikeroeconomics. Look for his ebook on Amazon soon.

Saturday, January 9, 2010

Negative Externalities in AP Microeconomics



Summary: Texting.



To give a deeper meaning t0 the graph, try tying the theory to texting while driving. The New York Times has a simulation here. The simulation, Gauging Your Distraction, measures reaction time when texting and compares the time to periods of non texting.

A negative externality exists when costs are pushed on to parties who are neither buyers of sellers of the good. In the neoclassical theory, people don't consider the costs that their actions impose on others. When all costs are considered, the social cost is greater than the private cost and less of the good is produced. In the graph, the socially optimal output is Q1 after all costs have been considered. This all sounds good, but how to you get students to actually understand it?

1. Find a volunteer who is good at texting and ask them to play the simulation. In this simulation only the top numeric keys can be used to change lanes and the mouse must be used to text. Students find this "unrealistic" at first, but quickly adapt with practice.
2. Let the student practice until she or he feels comfortable. While the student is practicing, ask the questions like, "How many of you text and drive?" "How many of you can text, drive, and eat?" "How many of you feel that texting and driving is more dangerous than just driving?" "How many of you have had an accident while texting and driving?" "Does anyone in this room disagree that texting and driving is more dangerous than just driving?" Asking these questions gives the volunteer plenty of time to practice.
3. A survey has shown that the average student receives and sends over 1,000 text messages a week. Now say, "Many states have made texting and driving illegal. Why?" Ask, "Would you agree that there are too many drivers texting and driving and this dangerous activity could result in harm to others?"
4. Begin the actual simulation. Just about everyone in the room will become a backseat driver. It was my observation that they all have an interest in the outcome since most routinely text and drive. After the simulation, discuss the results? I love to ask, "Did anyone see the gray lady on the side of the road?" This is a surprise to students. The National Highway and Traffic Association reckons that the most danger in texting and driving has to do with unexpected events such as a gray lady standing on the side of the road.
5. Now point out the intuitions of the curves. The MPC represents the individual's actions. He or she acted in a manner that considered only their costs and benefits. The MSB curve could represent everyone in the classroom who has texted while driving. It is subject to diminishing marginal utility. Finally, the MSC curve represents how a law could impose addition costs on those who drive. Perhaps drivers are fined or lose their license. Point out that at Q, the good is overproduced and at Q1 all costs have been considered.

When I used this plan, I had a great day. I had students that asked higher order questions like how enforcement might result in more arrests for texting but less in drunk driving. Suddenly, they were asking if airbags were a moral hazard that was like texting and driving. Many students wanted to try to see if they could do better than the volunteer.

If you use this simulation, you will find that your students will be engaged and remember the curves longer. I look forward to your comments.










About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author, and also publishes the Mikeroeconomics and iMacroeconomics VB blogs.
Friday, January 8, 2010

Federal Reserve Commentary on Inflation



Summary: Forecasting models. Economists disagree.



St. Louis Fed Analysis: Inflation May Be the Next Dragon To Slay. One tool economists use is a variation of the Phillips Curve. For an EconEdLink lesson plan on the Phillips Curve, click here.



You might want to consider subscribing to a Fed publication such as the Regional Economist. The Regional Economist takes about 20 minutes to read and is filled is insight that enriches my learning, interpretation, and instruction.

A look at the M2 money supply, will reveal an unprecedented increase in the monetary base. Doesn't it make sense that inflation will follow? The unemployment rate is a lagging indicator. Prices adjust first then wages. Doesn't it make sense that inflation will follow? The Phillips Curve suggests that workers will form inflationary expectations and demand higher wages. Doesn't it make sense that inflation will follow? What indicators do you use to predict inflationary pressure?

















About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author, and blogs at Mikeroeconomics.

Thursday, January 7, 2010

Two-Minute Drill -- Inflation rate



Summary: Find the inflation rate.

The inflation rate is .0196. I derived this answer by taking (104-102)/102. The price level measures the value of a fixed market basket of goods. Therefore, the change in the CPI from period to period is the inflation rate.

The St. Louis Federal Reserve Bank has the monthly Consumer Price Index for download in a graph or data. Use FRED data series:
CPIULFNS, Consumer Price Index for All Urban Consumers: All Items Less Food.

Extra Credit: Why does the mainstream media report the CPI less food and energy?








About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA.
Sunday, January 3, 2010

Two-Minute Drill -- Complementary Goods


Summary: Find the cross elasticity coefficient.


The answer is -.4% which means that pork is a substitute for beef.







About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an EconEdLink.org author, and also publishes the Mikeroeconomics and iMacroeconomics VB blogs.