Data response reflection
Posted by: 11cresma on: November 8, 2010
I am pretty happy about my data response. I nevertheless think I need to keep writing a lot for evaluation and include as points as possible. I usually do not write about enough points because I am not concise enough. I therefore need to also work on time management to make sure I keep enough time to develop all points and not just a few.
Also, I thought the analysis for the increase in demand was not enough; I need to make sure I know all the determinants of demand so I don’t spend too much time loooking for explanations in the article. I need to refer back to the article more directly so I am sure I am not off-topic.
Free trade VS protectionism
Posted by: 11cresma on: October 6, 2010
There are different arguments for both free trade and protectionism. Different people argue different things, depending on their interests. I agree with both to some extent.
Protectionism is good in the sense that it helps people to have a job and be able to live in normal conditions. It saves individual companies and we cannot forget about them. It is not so much an economic point of view, but more of a personal and political point of view.
Cheap imports and free trade will benefit the world as a whole and other economies, but I am not sure how great it the benefit compared to how badly the poor people will suffer with free trade. If the money and growth from free trade was spread equally between people I will agree with free trade, but in the real world it does not so the distinction between how great free trade is is not as clear.
I agree with free trade because it helps the whole economy, and in some ways it will help even the bottom part of the society. The economy will be able to grow and that is important because a better standard of living for the country is always good. Nevertheless, not all people will benefit from the growth so I am not convince with the greatness of free trade that economics agree upon.
Protectionism
Posted by: 11cresma on: October 4, 2010
Direct and Indirect Taxes
Posted by: 11cresma on: August 30, 2010
2. With the use of examples explain the difference between direct and indirect taxes. (200-300)
There are two different ways government can collect taxes from people: with direct and indirect taxes.
Direct taxes depend on income; it is a fraction of income directly taken from the income someone receives. For example, if the tax rate is 10%, someone earning 1 million dollars a year will pay 100 000 dollars as taxes. Direct taxes could also be progressive, which means the fraction increases as income increases, but in any case it is taken directly from income.
Indirect taxes are depending on purchases; for each purchase some portion of the money paid goes to government. For example, the sales tax could be 7% for each computer, so everyone buying a computer would have to give 7% of the price paid to the government. Indirect taxes could also be fixed; for example for each pound of rice bought 1 dollar goes to the government.
Direct taxes cannot be escaped since they are directly taken from the income earned, but indirect taxes can somehow be escaped if the person does not buy the product. Nevertheless, government tries not to charge too much from people or they will find ways to not pay it anyway.
Progressive and Regressive taxes
Posted by: 11cresma on: August 30, 2010
With the use of examples, explain the difference between a progressive tax and a regressive tax. (200-300 words)
Proportional is a straight line, because proportional means that the fraction of income paid as taxes same the same, so the line in is a 45° angle. However, some people agree that richer people should pay more, while some other say that they should pay less. Therefore there are two other types of taxes: progressive and regressive.
Progressive taxes are so called when the fraction of income paid as taxes increases at the income increases. For example, the person earning 10 thousand dollars a year will pay only 10% of taxes, while the person earning a million dollars a year will pay 20% of taxes. The fraction is not fixed, therefore as income increases the fraction increases, and the curve on the graph is higher than the proportional one.
Regressive taxes are a quite strange concept, as it implies that the more money someone earns the smaller fraction of it he has to pay as taxes. In that case, the 10 thousand dollars person will pay 20% of it as taxes, while the million dollars person will only pay 10%. The fraction is not fixed, but as income increases it decreases, and the curve on the graph is lower than the proportional one.
On the graph, we can really see that with progressive taxes, as income increases taxes increases while with regressive taxes as it increases taxes decreases. The “fairness” of each of them is nevertheless unsure.
My Danger Zones
Posted by: 11cresma on: August 30, 2010
One of my danger zone is careless reading of the question; I usually read half of it and start answering the question instead of fully reading it.
Another danger zone is lack of explanation about economic relationships because I don’t explain theories fully so it is hard to see a relationship between two theories.
The next danger zone is ineffective evaluation since I never got full points because I do not use enough evaluation possibilies.
Tax reforms: Soak the Very, Very Rich
Posted by: 11cresma on: August 24, 2010
Irfani posted this article “Soak the Very, Very Rich” on Diigo that I thought was really interesting in the sense that it shows the different concepts of taxes. It talks about the tax cuts that Bush implanted when he was the President of the United States and that are expiring at the end of 2010. Obama’s dilemma is to figure out whether he should keep the tax cuts, abolish them all, or modify them.
Before starting to talk about the actual situation and the future of the taxes, one thing to know is that there are three types of taxes: progressive, proportional and regressive. Those are illustrated on Figure 1 down below.
Proportional taxes are the easiest to understand: no matter the income earned, the fraction of that income that has to be paid as taxes is fixed. For example, in that case someone who earns 10 thousand dollars a year and someone who earned a million dollars a year will both have to pay 15% of it as taxes. The fraction is fixed; therefore the line makes a 45° angle: it is proportional.
Progressive taxes are so called when the fraction of income paid as taxes increases at the income increases. For example, the person earning 10 thousand dollars a year will pay only 10% of taxes, while the person earning a million dollars a year will pay 20% of taxes. The fraction is not fixed, therefore as income increases the fraction increases, and the curve on the graph is higher than the proportional one.
Regressive taxes are a quite strange concept, as it implies that the more money someone earns the smaller fraction of it he has to pay as taxes. In that case, the 10 thousand dollars person will pay 20% of it as taxes, while the million dollars person will only pay 10%. The fraction is not fixed, but as income increases it decreases, and the curve on the graph is lower than the proportional one.
James Surowiecki, author of the article, explains his point of view clearly: richer people should pay a high proportion of their income as taxes. For now, “someone making two hundred thousand dollars a year and someone making two hundred million dollars a year pay at similar tax rates,” but Surowiecki does not believe that it is fair. Fairness is a hard concept because it changes depending on people. Surowiecki thinks that progressive taxes (where richer people pay more taxes) are fair, while those same rich people may think taxes should be proportional, or regressive.
In order to solve this problem of taxes, Surowiecki has some solutions, since he says “A better tax system would have more brackets, so that the super-rich pay higher rates.” This is a great solution for the people from low to middle class since that will mean fewer taxes for them, but not so great for rich people since they will have to pay more. This solution is one that should be taken into consideration since it has quite valid arguments, but it also has some problems. One major problem is that it does not take in consideration that “in a place like Manhattan, where the average apartment sells for nine hundred thousand dollars, your money doesn’t go as far.”
That solution may need some changes, but it is a possible solution for the problem of Bush’s taxes cuts expiration.
End of Year 1 reflection
Posted by: 11cresma on: June 10, 2010
During this school year I realized I could well understand diagrams and once I understand them I find them easy to memorize, but I need to work on definition to make sure they are precised.
This exam allowed me to make sure I really understood the concepts learned this year. It also helped really know what is expected in the extended response and the data response questions.
Next year I will try to learn my definitions more precisely, and to work more regularly because I did not do that so much this year. I also need to read more the news because apart from the initiative I did not really do it.
Reflection on the PBL
Posted by: 11cresma on: May 31, 2010
Reflection on the PBL:
The Problem Based Learning (PBL) experience was helpful because we really had to understand all supply-side and demand-side policies. We had to make sure we knew about all policies and their effects, so the PBL was good for that. Nevertheless, I do not think the presentation in front of the “president” was really worth it because it is too short to really be able to express everything we want to say. I think a presentation in front of the class would have been enough.
Reflection on the presentation:
In general, the presentation went pretty good. Andrew knew what he was talking about and we were good timewise. The questions were not as bad as expected. I was expecting some of the questions so I did not mind replying to them. It was a bit tense but I was expecting a lot worse. I think we should have prepared the questions more so we would have make sure to be able to reply to all of them accurately. Nevertheless I thought it was quite fine, since we knew what was happening.
The Pope against condoms – trying to increase the gap of the positive externality?
Posted by: 11cresma on: April 26, 2010
The Pope and the Vatican is strongly opposed against the use of condoms, and thus because of problems with the religious ethics (see Article). For instance, Catholic religion “steadfastly opposed to the use of condoms for any reason.” Nevertheless, the use of condoms is a positive externality of consumption as shown on the diagram below.
As shown on the diagram above, the MPB differs from the MSB, with the MSB being greated than the MPB, which creates the positive externality. The MPB differs from the MSB because condoms can stop diseases such as HIV or AIDS. If less people have the disease since they used condoms, there is a greater change that less people in general will have it, since condoms largely reduce the risk of transferring the disease.
Nevertheless, the usual goal of economies is to increase demand (so Marginal Private Benefit) and make it closer to the Marginal Social Benefit. However, the goal of the Pope and the Vatican is to shift the demand curve the other way, as shown on the diagram below.
The Pope is hoping, and advertising people to do so, to shift the demand from D1 to D2, and thus reduce the quantity of condoms consumed from Q1 to Q2. He appeals to the people following religion to not use condoms, even though it has a positive externality on society and we should try to increase demand.
The Pope, by following so strongly its religious beliefs, is going against the economy and is not beneficing the society. It inforces the gap between the private benefit and the social benefit, instead of reducing it, which is quite surprising.
