WEEK 8 Practicing Your Knowledge

I played the stock market online this week. I think analyze the stock market is a part of hands-one learning of economic field. It is my first time trying to play the stocks even its only practice without using the real money. The similarity with the real stock market is that I can buy and sell stocks. 

The software I used called "Da Zhihui" (a chinese stock software). When I first time open this software I have no idea what to do looking at those red and green figures on the charts. Each stock has its own number or code. If I want to find a specific stock for an example Longji Stock, I should first check its code or I can just type its stock name to find the details or market. The code of Longji Stock is 601012. The price per share of Longji today begins with 16.80, the average since now is 17.40, and the price now is 17.28. The price is unstable since people sell and buy the stock.  

The game starts with the capital of 1000000.00. At first I don't know what stock I should buy. Then I read  the news of those companies. I think if there is a big event of a company, its stock price might has a big jump. Longji Stock is one of the news board. It says the performance of Longji Stock keep increasing in the third season report. According to the news, I think Longji might be a authentic company that I can buy its stock. Then I search Longji on the internet to get some basic idea about its company. After I analyze its market, I decide to buy its stock. At first time, I bought 500 shares of Longji stock at the price of 17.38. After buying the stock, my eyes keeps at looking the chart analyze its rise and fall. When I saw its price rise to 17.45, I decide to sell my share to gain the profit. It is interesting that after I sold my shares in two hours, the price raised to 17.49. When I saw this situation, I am regret of selling shares too early. If I wait more hours, I might earn much mine. Human alway can't satisfied at anything. 

I played several times of the stock market game. Every time I play I would buy some shares of Longji stock, but not every time I am the lucky one. I also bought the NDX share, DJIA share, and some stocks that I never heard before. I earned little in the end. I think its a valuable and experiential game which I can learn many things and have lots of fun. 

WEEK 8 Free Post

This week, I am going to show a very basic Economic models to explain how does the economist analysis the market.

Demand and Supply: In the market, the suppliers are the households, and firms, which produce goods and provide goods to the market; the demanders are the customers who buy the goods. The x-axis is the quantity, and the y-axis is the price. As we analyze, as the quantity of supply increase, the price also increase. We can conclude that there are more people want to but the product, thus the price would go up as the quantity increase. On the other hand, as  the quantity of demand increase, the price decrease. We can see that when there are more people want to buy the product, the price would drop to let the customer to buy more good. The equilibrium shows that when the supply equal to demand. The equilibrium point can show how many product should produce at what price.

According to the wikipedia, "the supply and demand is an economic model of price determination in a market.

The model can only give us a general overall of the market. In the reality world, the market won't go the exactly same as show in the diagram above. Some firms always produce more goods than the quantity show at the equilibrium points.

Work Cited:

Heakal, Reem. "Economics Basics: Supply and Demand". Investopedia. 2013. Web. Oct. 31.2013

Week 7 Free Post

This week I am going to talk about how does bank take role in economics field. I find this cartoon which can show the relationship between citizens, banks and the government. As we know that the citizen invest their money in the bank and the bank will provide a variety of strategies to attract people to put their money in the bank and later on, people can get more money than the initial money based on the interest rate. As the bank has money, they lend those money to the firms and companies. The banks are like the finical intermediations that borrow money from citizen and lend money to firms.

According to the cartoon below, the banks takes the money from the citizen's pocket, and the government does nothing except sleeping. It seems that the citizen is the most sufferer in the economy recession.

Actually, when the depression of economy happen, both of the banks and governments suffer from the pain. The Great Depression in 1992 had both influenced the banks and government. Even though the citizens are the most sufferers during the period that lots of people lost their jobs, government and banks also suffer from the depression. Some banks has rusted and the government has a lots pressure during the depression period. 

Work Cited:

The Economic Collapse. What am I Missing Here. Oct.11.2011. Web. Oct.22.2013.

WEEK 7 Contemplating Controversy

     I found a Chinese article which is related to deflation versus inflation in terms of Chinese economy in 2005. This topic was one of the most important controversies during that year because the debating prices is exactly to argue the future economic tendency. If the economy is inflation, it means the money supply will be bigger than the money demand so that the currency will be devaluated. However, if the economy is deflation, currency in circulation will be decreased, people will obtain less money, purchasing power will become smaller so that prices will be lower. 

       In addition, long-term deflation will lead to higher unemployment and economic decline. Followings are the basic differences in views that cause the controversy. Some people thought China's consumer price index will be positive from negative in the third quarter of this year and money and quasi money supply will be lower than 10% in the end of year. Their reasons are basically the same. There are two aspects which support the prices increasing next year or next two years in China. The first one is the food shortage, which leds to increase the food price; another one is the fast increasing price in the real estate field. Nonetheless, food supply was more sufficient this year and real estate’s price decreased because of country's regulative policy. At the same time, in the past two year, excess investments would cause excess production so deflation would happen because demand would be smaller. But some people were skeptical with this topic. They deemed that domestic investment rebound momentum is still very fierce, which would drive the rise in producer prices(PPI). Now, PPI’s effect has transferred to CPI so that inflation would happen. The second reason is that the central bank predict M2 will rise 18% this year, the money supply is adequate, may only lead to inflation pressures.

      All in all, the discussions above are both sides of issues and the basic differences in perspective which trigger the controversy. 

Work Cited:

Economics Reference News Editorial Department. "The Biggest Economic Debate in 2005". Finance. People News. 2005. Web. Oct.18.2013

Link:

http://finance.people.com.cn/GB/1045/3992343.html

WEEK 6 Free Writing

This week, I learned some knowledge about Keynesian Economy from the Macroeconomic class. Keynesian is a economic theory that says the output (GDP) is equal to the aggregate spending in the short run especial during the recessions. 

From the diagram above, the AE standard for Aggregate expenditures, and Y is the GDP/Income of a nation. Because people's spending is depends on how much money they earned (income), thus the income is equal to the output in Keynesian theory. 

I also learned several equations which related to Keynesian theory. For an example, AE (Aggregate expenditures) = C (autonomous spending) + I (invest) + G (government purchases) + X(import) - M (export). Because export is going our from the nation to another country, therefore, the equation should subtract export. 

Personally, I think I am not fully understand what the Keynesian theory is really about, unless I only know some basic ideas and formulas of it. I hope that as I learn more and read more materials about the Keynesian Economy, I will know more about it and hope one day I can analyze this theory on my own perspective. 

Work Cited:

Martin, Lawrence. "Keynesian Economics-Short Run with Sticky Prices". EC202 Lecture Notes. Oct.2013. Web. Oct.17. 2013

WEEK 6 Evaluating Source

      The source that I found about Economics field named "Consumer Economics". This book talked about how individual and household trade products in the market, and what is the consumer role in the economics system. 

      According to the author Davis Folsom, he pointed out his understanding of the consumer role in the economic system that, "Demographics, consumer's age, race, gender, occupation, and income, and income influence consumer;s economic decisions through differences in marginal propensities to consume. Older consumers tend to spend less of their disposable income than younger consumers. Ethnicity and gender also influence consumer spending priorities. Marketers spend hundreds of millions of dollars annually trying to  better understand their target market, the people who buy their products and services, and what influences their decisions." From his perspective, different consumer will purchase different products and the householders will use this element to make a specific target for their markets, which can make more efficient effect. 

      In his book, he also discussed the 2008 recession in the United Stated.

Work Cited

Ed. W. Davis Folsom. "Library of American History NEw York: Facts on File". 2011. p142-143. Copyright 2011. 2004 W. Davis Folsom. Web. Oct. 10. 2013. 

WEEK 5 Free Post

This week, I watched a video on the youtube named "what is economics".  The video used words, datas, symbols and pictures to explain what is economics in general.

People sometimes heard that economics is study of money, or its another way of accounting, or its kind of business, but none of these can be best explain what is economics literaly. From the video, "economics is the study of the use of scarce resources that have alternative uses."

The picture above best show what is economics. people-resources-desires. People need resources to fill their desires. The resources are limit, but people's desires are infinite. Therefore, people need to make choices how to use the scare of resources. Economics study these choices. 

There are two kind of categories of economics, positive and normative. Positive economics have no judgement of value and normative economics have value judgements. 

As we know that economics are divided into two categories, microeconomics and macroeconomics. From the video, microeconomics is the studies individual agents and markets; while macroeconomics is studies entire economy. 

Economics is a broad study that not only study markets, but also study crime, war, family, religion, culture, politics, law, and even genetics. People use economics everywhere not only the business, government, but also publics, and every where we live. It's part of our life. 

I learned lots of things from the video, it teaches me something that I didn't know before such as the word Econometrics. It is specialized and analysize the data. Thus, it's not one's experience, but come from the real world with the truth. There are lots of mathematic uses in the Econometrics field. Personally, I think I am going to see and learn this word, Econometrics, millions of time in the future because I am studying Economics and I am going to be an Economist one day. 

Work Cited

Petersen, Garrett, prod. What is Economics? Youtube. Youtube, 14 July, 2012. Web. 10.05.2013. 

video link: http://www.youtube.com/watch?v=2YULdjmg3o0

WEEK 5 Defining Ethics

     From my perspective, I agree with the view by Laurence Kotlikoff that Economists need a code of conduct, and to be honest with themselves. Everyone should be honest regardless of what he/she does and respect others. For economic field, every economist should possess these qualities. For example, resolving a big and hard economic problem need a long time sometimes because economy is a complex domain actually.When older economists report some related sources of their findings, young and new economists should respect their achievements even though their findings can be improved. In addition, being honest is the most important. These is no doubt, one person’s ability is limited for thinking and understanding an economic problem like a relationship between two specific academic terms. At that time, he is likely to need help or suggestions from some resources. Then he should disclose basic information about those resources if he wants to report his findings. And joining economic profession is to discover economic facts due to own interests rather than trying to invent them by own unusual but wonderful thinking. 

     For me, I consider to find a job about economy so now I am doing many things such as joining an economic organization, reading some economic researches and analyzing some economic problems to help prepare me for work in economic field. These ways are effective and I always following these ethic guidelines above. While reading researches of the economy, I must respect their findings because things in studies or researches all can assist me to understand the economy or analyze economic problems. Furthermore, I would be honest all the time while determining to join an economic organization because everyone admires honest persons and it can urge to form a good quality for doing anything. All in all, I am happy to follow these guidelines no matter where I am.

Work Cited

Kotlikoff, Laurence. "Economists need a code of conduct, and to be honest with themselves". Do Economists Need A Code of Conduct? The Economist. 2011. Web. Oct.03.2013