The Determination of National Income

So last week, we talked all about the Determination of National Income. First off, lets quickly touch on GDP and what it is. GDP as we've already learned, stands for Gross Domestic Product, and what it measures is the flow of money in the circular flow in the diagram we received and if GDP changes, that means the flow of money has changed.

The national income accounts for many factors that typically include the savings within a household, investments, and the equilibrium GDP with each category being self-explanatory like households saving money for later or near future, and investments from businesses, by spending money towards other businesses which could increase payment to households and then increase GDP. As for equilibrium GDP, all it is, is the GDP being stable if savings is equal to the investment. If there is any sot of imbalance between savings and investment, GDP will either increase or decrease substantially.

Investments can come from many places and sources that include:

1. Income from sales 
2. Borrow from bank or institute
3. Issue shares 
4. Foreign investors 

All of these examples brings money into the government or company and allows them to invest into whatever is needed. 

We also talked about the Paradox of Thrift which essentially was talking about that if there was an increase in the savings within the economy, that would lead to lower levels of income and therefore lover levels of savings over time. A guy by the name of John Maynard Keynes said that a consumer spending contributes to the collective good because one person's spending is another person's income. I found that this makes total sense because if companies are trying to save more money then they won't be willing to pay their workers as higher wages which in return, workers won't have enough pocket money to just put into savings later on. Also, when a person is spending their money more, its giving companies money to provide jobs and give other people an income. 

Lastly, we talked about The Consumption Schedule which explained the APC (average propensity to consume), APS (average propensity to save), MPC (marginal propensity to consume), and MPS (marginal propensity to save). It is a table of numbers that shows the relation between consumption expenditures and income for a household sector. The purpose of this is to summarize the consumption-income relation within a household. 

• APC = the ratio of consumption to income. 
• APS = ratio of savings to disposable income.
• MPC = proportion of increase indisposable income that is used for consumption.
• MPS = changes in the level of savings compared to the changed in level of disposable income.

With these four different equations, you can calculate the different consumption schedules and come to the conclusion between the consumption and income and whether it is sufficient. 

https://www.youtube.com/watch?v=tm35tW_9OMU

Works Cited

"AmosWEB Is Economics: Encyclonomic WEB*pedia." AmosWEB Is Economics: Encyclonomic WEB*pedia. N.p., n.d. Web. 04 Mar. 2015.

"Gross Domestic Product." Wikipedia. Wikimedia Foundation, n.d. Web. 04 Mar. 2015.

"Paradox Of Thrift Definition | Investopedia." Investopedia. N.p., 25 June 2010. Web. 01 Mar. 2015.

Money!

Now last week we talked a lot about GDP and different types of ways to measure a country's standard of living. Until the last day, which was Friday, we started to talk a little about money. Money seems like an interesting topic because we use it in our every day lives, and use it for many things.

You may ask what is money? Money is the means of exchange. With money someone can trade their own goods for what they want. It seems like money is simple and we know the basics of what it is and does, but it hasn't always been so easy to understand.

It seems simple now that money is the medium of exchange, because everyone wants money and will trade with you for a certain price. Back in the olden days money wasn't exchanged for trade, but other goods and services were. That wasn't very efficient because you would have to find exactly the right person who wanted what you were trading and had what you wanted. Since we just trade with money now, it makes it easy for everyone to trade and to keep on trading since money never expires. Money also has a set value, therefore when a good or service is priced you are able to tell how good that product is for the price it is at. There is no confusion or having to argue over the price, once the price is set that's what it is and if you want it badly you will pay for it.

There are also different types of currencies so money can be used in different countries. Each country has their own currency, which makes them unique in a way. Even though there are different currencies money still has the same type of value. Now sure each currency is worth more or less than another, but it still has the same value when you want to buy, sell, or trade something.

Everyone wants money and wants a lot of it, there's people that work long and hard for their money but there are also people who scam there way to get to the top and be rich. People do illegal things to gain the amount of money they want. For example like Connie mentioned in her presentation last week people can get scammed or be the ones who are the scammers by a ponzie scheme, or deal drugs, and even counterfeit bills. With the new Canadian bills we have it is hard for people to counterfeit them now. If you see in the picture below there are many things that prevent this from happening. 

There are pros and cons to money as you can see but in the end everyone does need money to have a well-balanced life and to keep the economy running. As long as people learn to earn money the proper way and not cheat the system then everything will be balanced in a way.


https://www.youtube.com/watch?v=3PP2j60LvjU

Works Cited

"Functions of Money." Functions of Money. N.p., n.d. Web. 22 Feb. 2015. 

"What Is Money?" Economics and Liberty. N.p., 28 Oct. 2010. Web. 22 Feb. 2015.

Largest Ponzi Sceme in Canadian History

Good afternoon Miss Teetaert and fellow classmates. As we know, after exams we have began to learn about the topic of GDP. Gross Domestic Product. As we know, the formula by which to measure GDP is GDP=C+I+G+(X-M). I know that we all know what each letter stands for but for reviewing purposes we'll go over what each letter stands for. C for consumption. I for investment. G for government. X for exports, and M for imports. The topic that I'd like to talk about today would have affected the GDP because individuals had more money to spend, for a time, which increased consumption and also related to investments. 

The topic that I'd like to cover is what is being considered to be the largest ponzi scheme in Canadian history. A trial that has concluded yesterday after 6 long years of being in the criminal justice system. However, before we dive into the topic, I'd like to cover what a ponzi scheme really is, as maybe some of you may not know (I personally didn't know exactly what it was before this post). Below is a video that briefly and effectively describes what a ponzi scheme is.

Now that we have that background information, we'll talk about the topic further. This past Saturday, February 14th, one of the longest trials in Calgary history came to an end. An 11-member jury found Milowe Brost and Gary Sorenson (Calgary businessmen) guilty on 2 counts of fraud, and 2 counts of theft. They are facing up to 14 years in jail.

Milowe Brost, 61 & Gary Sorenson, 71

After five months of trial and three days of deliberation, the two men arrested in 2009 were found guilty for their crimes. Police said investors around the world lost between $100 million and $400 million in the scheme. The Crown says many lost their life savings, retirement plans, even equity in their homes. Some even took their own lives because of the massive financial burden the Ponzi scheme left behind.

The price of crude was climbing toward $100 a barrel in Alberta in the early 2000s and Albertans had more spare cash than ever. The deal they were offered was too good to pass up. They were promised a 34 per cent annual return on an investment of $99,000 which was supposed to grow to $1,035,000 within eight years.

Their scheme took place from 1999 to 2008 and involved companies named Syndicated Gold Depository SA, Base Metals Corporation LLC, Bahama Resource Alliance Ltd., Merendon Mining Corporation Ltd. and Strategic Metals Corp. Investors were told that the business involved selling gold for refining and that the deal was “low risk.” However, it was quite the opposite. The companies were really just fronts to funnel cash to the two men.

Most of the $300-million has never been found and it probably won’t be, because it’s hidden offshore, paid out to early investors or spent by the pair on lavish lifestyles, including a massive ranch in Honduras, a luxury bass-fishing lodge and flights on private jets. Financial records were moved to Belize, and both men claim they are now broke, in Canada at least.

This, overall would affect Canada's GDP negatively since the people affected lost a lot of money, money that they would have otherwise spent (consumption).

I understand that sometimes investments don't work out, but I feel awful for the people who fell victim to these horrible people. Some people no longer have pensions, others no longer have family members. I just don't think that 14 years maximum jail time is enough. chances are they'll get paroled and promptly follow their massive amounts of money out of Canada.

Works Cited

“How A Ponzi Scheme Works” Youtube. 2 May 2012. Epipheo. <https://www.youtube.com/watch?v=VXRkfqw67GE> 16 Feb. 2015.

Grant, Meghan. Milowe Brost and Gary Sorenson. photographs. n.d.  Ponzi scheme trial: Milowe Brostand Gary Sorenson found guilty. CBC. 16 Feb. 2015.

Graveland, Bill. “Jury finds Calgary men guilty in multi-million dollar ponzi scheme”. The Globe and Mail. 14 Feb. 2015.  The Canadian Press. <http://www.theglobeandmail.com/news/alberta/jury-finds-calgary-men-guilty-in-multi-million-dollar-ponzi-scheme/article23004620/> . 16 Feb. 2015

McKenna, Barrie. “Largest Ponzi scheme in Canadian history exploited boom time Alberta”. The Globe and Mail. 15 Feb. 2015. The Globe and Mail. <http://www.theglobeandmail.com/report-on-business/largest-ponzi-scheme-in-canadian-history-exploited-boom-time-alberta/article23010870/> 16 Feb. 2015.

Throwing money cartoon. Cartoon. n.d. throwing money cartoon Cartoons. Cartoon a Day. 16 Feb. 2015.

GDP

GDP

Last week, in the class, we learned about economics indicators: GDP. GDP stands for Gross Domestic Product, and is the primary indicator to be used to gauge the health of a country’s economy. It shows the employment and unemployment, inflation, and level of economic activity. Every country in the world uses the GDP to measure their health of the country, indication of standard of living, and the value of goods and services produced in given amounts of time, which is usually presented on percent basis. Even if the country is high on GDP, that does not mean that GDP per capita is also high. GDP per capita is also important because it shows the average output per person in a nation. The growth in the GDP per capita tends to mean the increase in productivity. 

GDP can be measured using the formula: GDP= C+I+G+(X-M). C stands for consumption which is the value of goods and services bought by people. Consumption is usually the biggest term for GDP. I stand for investment, value of machinery, plants, and buildings that are bought for production purposes. G stand for government, purchasing of goods and services by government. X stand for exports, goods and services sold to foreigners. Lastly, M stand for imports, goods and services purchased abroad.

How it relates to the world

United States of America had significant impact by a recession. A recession is the slowdown in overall economic activity. Recessions always bring unemployment. Survey by the Fed showed that unemployment nearly doubled from 5% to 9.5% from 2007 to 2010. This forced many individuals to use their savings, credit cards or get a personal loan, which will direct to increase in debt. This incident had greatly affected the consumption which is the part of GDP. During the time, keeping the job was considered lucky as long as they were willing to take a cut in pay. As the cycle of GDP decreased or cut off, the property value also declined eventually lead to average American Family's net worth declined from $126,400 in 2007 to $77,300 in 2010.
http://www.investopedia.com/financial-edge/1212/will-your-net-worth-be-affected-by-a-recession.aspx

Video

https://www.youtube.com/watch?v=h-nTxfNM5qs

Work Cited

"Will Your Net Worth Be Affected By a Recession." investopedia <http://www.investopedia.com/financial-edge/1212/will-your-net-worth-be-affected-by-a-recession.aspx> Sun. 08 Feb. 2015.
"Per Capita GDP." investopedia  <http://www.investopedia.com/terms/p/per-capita-gdp.asp> Sun. 08 Feb. 2015.
"Exports." economicswebsinstitute  <http://www.economicswebinstitute.org/glossary/exports.htm> Sun. 08 Feb. 2015.
"Imports." economicswebsinstitute  <http://www.economicswebinstitute.org/glossary/imports.htm> Sun. 08 Feb. 2015.
"Investment." economicswebsinstitute  <http://www.economicswebinstitute.org/glossary/invest.htm> Sun. 08 Feb. 2015.
"Consumption." economicswebsinstitute  <http://www.economicswebinstitute.org/glossary/cons.htm> Sun. 08 Feb. 2015.
"World GDP Ranking 2014 | Data and Charts." knoema <http://knoema.com/nwnfkne/world-gdp-ranking-2014-data-and-charts> Sun. 08 Feb. 2015.
"Economic Indicators: Gross Domestic Product (GDP)." investopedia <http://www.investopedia.com/university/releases/gdp.asp> Sun. 08 Feb. 2015.
"Why is GDP and why is it so important?." investopedia  <http://www.investopedia.com/ask/answers/199.asp> Sun. 08 Feb. 2015.
"Economics Made Easy - Lesson 6: GDP".Youtube. Youtube, n.d. Web. <https://www.youtube.com/watch?v=h-nTxfNM5qs> Sun. 08 Feb. 2015.

Dollarama profit up despite rising input costs

The article I wanted to talk about today is called “Dollarama profit up despite rising input costs”, posted on CBC news on December 4, 2014. This article is making it clear that since the dollar is going down but raising wages for employees is going up that it is hard for Dollarama to function its business. The profits of the dollar store increase to 55 cents a share in the three months up to the end of the month October. Dollarama’s overall sales had boosted 12% to $588 million. The chain that started off in Montreal has added eleven new stores, making a total of 928 stores. It is quite obvious how convenient Dollarama is to the public, whether it is for a picking up a birthday card, Christmas decorations, or some gum.  The chain is reliant on imports, it is quite frail towards the low loonie, and this is because a low loonie makes bringing in the products more costly. It is said that the input costs are expected to go up more in the new year when new tariffs on foreign goods are applied. Some provinces have increased their minimum wage and it’s not looking so good for their company’s profits. Dollarama retailers are hoping that the Christmas season brings in a lot of customers. "You have to appreciate that the dollar store business is a labour-intensive business. " 

                                                                                                                         - CEO Larry Rossy.

The government function that is involved with this article is maintaining competition. This is because, Dollarama is going through some difficult times in the sense that they can not afford to raise their employees’ wages with the loonie being so low. Therefore, the chain of stores must proceed to think about new ways in which to bring in customers for the Christmas season. Dollarama is in competition with Buck or Two and the evil cousin Dollar Tree. Dollarama must think of new tactics to use in order to bring in more people otherwise they will have no choice but to lay off people or hope the Canadian dollar increases. If Dollarama prices increase, people are going to notice and they will put their money to the items sold somewhere else.

By: Remoni Fernanopulle 12A

News, CBC. "Dollarama Profit up despite Rising Input Costs." CBCnews. CBC/Radio Canada, 04 Dec. 2014. Web. 08 Dec. 2014.

Manitoba on all-day kindergarten

     The article that I chose to talk about is called "Manitoba won’t budge on all-day kindergarten despite internal push" written by Chinta Puxley of The Globe and Mail. The article was about an issue that the provincial government of Manitoba is currently dealing with: the call for all-day kindergarten.
     Full day kindergarten currently exists in 7 provinces and territories across Canada, and an Ontario study concludes that enabling full-day kindergarten improves readiness of children going into grade 1 and accelerates their development. Despite an Education Minister backed poll concluding that 61% of Manitobans surveyed were in favour of having this issue be a government priority, the government resists the call for it. The reason why is that it is a very costly initiative, and the province is already working on reducing the class sizes for grades 1-3. In Manitoba, there is some school divisions that offer full-day kindergarten, but it is not funded or assisted by the government. However though, the Education board of Manitoba will be working with a few school divisions to analyze the impact of full-day kindergarten. It is expected that at some point in the future, full-day kindergarten will be supported by the government, but at the time being it does not look to be any time soon.
     

research shows children in all-day kindergarten have
better language, social and communication skills

     The only government function that relates to this article (as far as I can tell) is Correcting for Externalities. Since kindergarten is part of our education, it fits under that section. Eventually, if this were to go through and be supported by our provincial government, the people would have to pay taxes to fund it, just as we already pay taxes to fund the education system overall. 
     Any changes in taxes will always be opposed to by the common folk, but if it's in the best interest of our children and our country's future, isn't it our duty to contribute? I think so.

Manitoba won’t budge on all-day kindergarten despite internal push

Olczyk, Iwona. A child painting. Photograph. n.d. Iwona_Olczyk. pixabay. 7 December 2014

Ottawa reveals details of $1.5-billion fund for science strategy

In a recent visit to IBM headquarters in Markham, Ontario Prime Minister Stephen Harper has announced a $1.5 billion funding program that will advance Canada's science research to a global scale. This is the first update to this field in 7 years. The program, Canada First Research Excellence Fund, will focus on bringing researchers to Canada and creating innovation in the private sector. In it, different universities and research institutions will bid for funding with proposals that will be judged based on scientific merit and alignment with government ideals. This fund will be used over seven years with $350 million offered in the first round of proposals.The 5 priority research areas stated by the strategy document are:

• environment and agriculture
• health and life sciences
• natural resources and energy
• information and communications technology
• advanced manufacturing

The major criticism against this program is that fact, that there was no mention of any ability of these federal scientists to communicate with the media, and the lack of mention of the budget cuts to these labs. 

In this article, we can see the government function of correcting for externalities being demonstrated. This government function includes providing incentives like subsidies or funding to create positive externalities. In creating this program, the government is giving more opportunities for scientists to stay in the country or give other scientists incentive to move and work here. If this program is successful, the scientific field in Canada will grow creating more jobs and helping the economy. One of the reasons that the government provides things like funding programs is to look at what helps the economy in the long run even if it might cost a bit in the short run. I believe that it's a smart idea to invest in new and young ideas that can make Canada an important country based on it's contributions to scientific research. 

http://www.theglobeandmail.com/news/politics/ottawa-reveals-details-of-15-billion-fund-for-science-strategy/article21957502/