Welcome to MGT 704:

Economics for Managers

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Course Objectives for “Economics for Managers” (MGMT 704)

- Provide an introduction to the concepts and practical applications for managers of both microeconomics and macroeconomics. The text defines microeconomics and macroeconomics on page 820 as: - “Microeconomics: the study of how households and firms make

decisions and how they interact with markets.” - “Macroeconomics: the study of economy-wide phenomena,

including inflation, unemployment, and economic growth.”

• Or we could just as easily title this course: “Ripped from the Headlines!”

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http://www.wsj.com/articles/auto-sales-cool-in-august-on-later-labor-day-1441108884

Week #1 (Sept. 5): Module 1: Introduction; Supply & Demand

http://www.cbc.ca/news/business/oil-outlook-grim-amid-continued-supply-glut-1.3185506

Week #1 (Sept. 5): Module 1: Introduction; Supply & Demand

http://thehill.com/policy/technology/252352-dem-to-fcc-broadband-subsidies-would-help-veterans

Week # 2 (Sept. 19): Module 2: Elasticity; Supply, Demand, & Government Policies;Efficiency of Markets

http://www.wsj.com/articles/the-fcc-imposes-netflixs-broadband-policy-1441149876

Week # 2 (Sept. 19): Module 2: Elasticity; Supply, Demand, & Government Policies;Efficiency of Markets

By Holman W. Jenkins, Jr. Sept. 1, 2015 7:24 p.m. ET

… More than one-third of today’s expensively rolled-out bandwidth already is consumed in peak hours by a single company, whose customers represent a tiny minority—about 1.2%—of Internet users. Richard Bennett of High Tech Forum calculates: “If 12 percent of the Internet user population is streaming at prime time, the traffic load goes up to 340% of today’s level; and if it rises to 60%, the load goes up to 1700%.” And suppose users want super-high resolution 4k TV, which requires four times as much bandwidth as today’s hi-def?

Week #3 (Oct. 3): Module 3: Application: International Trade; Costs of Production; Competitive Markets

U.S. stocks plunged Tuesday, extending a tumultuous period for markets into another week amid new evidence that China’s stubborn economic slowdown is damaging global commerce.The trouble started with a weak reading on China’s manufacturing sector and was amplified by a 14.7% drop in South Korean exports for August, the first evidence of a decline in regional trade since China devalued its currency Aug. 11.

http://www.wsj.com/articles/china-fears-sink-markets-again-1441154898

Week #3 (Oct. 3): Module 3: Application: International Trade; Costs of Production; Competitive Markets

http://www.wsj.com/news/articles/SB21315267406166804839804581202711758561904?mg=reno64-wsj#mod=todays_us_

Week #3 (Oct. 3): Module 3: Application: International Trade; Costs of Production; Competitive Markets

http://www.wsj.com/news/articles/SB21315267406166804839804581202711758561904?mg=reno64-wsj#mod=todays_us_

(continued from the last slide)

As the economies of the U.S. and many other wealthy countries begin to pick up speed, Canada’s woes so far this year are a harbinger of what could come for a small clutch of advanced economies that rely heavily on commodity exports—and demand from China—for their economic growth.In Australia, a 40% drop in iron-ore prices over the past year has dragged down quarter-on-quarter growth in the gross domestic product, hitting 0.9% in the first quarter of 2015. Norway’s oil-dependent economy grew just 0.2% in the second quarter from the first as oil investment dropped. Canada is heavily dependent on energy and mining, with crude oil ranking as its top export and commodities in total making up about 17% of its economy, according to the country’s central bank. Among developed countries, Canada, Australia and Norway are distinctive “because they have become more dependent on commodities for their exports, particularly since the turn of the century,” when commodity prices were rising, said Tony Makin, a visiting professor at the Lee Kuan Yew School of Public Policy in Singapore.

Week #4 (Oct. 17): Module 4: Monopoly; Monopolistic Competition; Oligopoly; Factors of Production

http://www.nmprc.state.nm.us/rssfeedfiles/pressreleases/2015-5-14PNMsRequestToRaiseResidentialRatesUnanimouslyRejectedByThePRC.pdf

Week #5 (Oct. 31): Module 5: Measuring a Nation’s Income and Cost of Living; Saving, Investment, & the Financial System; Unemployment

http://www.wsj.com/articles/u-s-productivity-increases-at-3-3-pace-in-second-quarter-1441197343

Week #5 (Oct. 31): Module 5: Measuring a Nation’s Income and Cost of Living; Saving, Investment, & the Financial System; Unemployment

http://www.cnbc.com/2015/09/02/fed-beige-book-says-economic-activity-expanding-growth-expected-to-continue.html

Sept. 2, 2015:

Most of the country is experiencing solid growth, with only the energy sector providing a drag, the Federal Reserve reported Wednesday.

The Fed's Beige Book is released eight times a year and provides a snapshot of economic conditions in the Fed's 12 districts.

The news wasn't as good, however, when it came to energy. "Districts reporting on the energy sector indicated that conditions were stable to declining; coal production was down in the Richmond and St. Louis Districts, while oil-related activity declined in the Cleveland, Atlanta, and Dallas Districts." the report said.

Week #6 (Nov. 14): Module 6: The Monetary System; Money Growth & Inflation; Open-Economy Macroeconomics

http://finance.yahoo.com/news/feds-rosengren-says-inflation-doubts-171000958.html;_ylt=AwrXnCYXbOdVBEwA4y_QtDMD;_ylu=X3oDMTByYnR1Zmd1BGNvbG8DZ3ExBHBvcwMyBHZ0aWQDBHNlYwNzcg--

Federal Reserve Bank of Boston President Eric Rosengren said uncertainty over inflation and global growth justify a modest pace of interest-rate increases, regardless of when the central bank begins tightening.

“Given current and forecast conditions, not only is the pace likely to be gradual, but the federal funds rate in the longer run may be lower than in previous tightening cycles,” he said Tuesday in a speech to the Forecasters Club of New York.

Rosengren and his colleagues on the Federal Open Market Committee will gather in Washington Sept. 16-17 to consider raising rates for the first time since 2006. He said recent stock market turmoil, and data pointing to weaker global growth, could sap confidence that inflation would head higher.

Week #7 (Dec. 5): Module 7: Theory of an Open Economy; Aggregate Supply & Aggregate Demand; Monetary & Fiscal Policies

http://www.nytimes.com/2015/03/19/business/economy/fed-interest-rates-fomc-meeting.html?_r=0

WASHINGTON — The Federal Reserve on Wednesday moved to the verge of raising interest rates for the first time since the economy fell into recession more than seven years ago, even as officials suggested that the Fed might not pull the trigger until well into the second half of the year.

In a statement released after a two-day meeting of its policy-making committee, the Fed said that it would consider raising its benchmark rate as early as June, and it removed from the statement a promise that it would be “patient.”

http://www.wsj.com/articles/fed-appears-to-hold-line-on-rate-plan-1440959106

Week #7 (Dec. 5): Module 7: Theory of an Open Economy; Aggregate Supply & Aggregate Demand; Monetary & Fiscal Policies

JACKSON HOLE, Wyo.—Federal Reserve officials emerged from a week of head-spinning financial turbulence largely sticking to their plan to raise U.S. interest rates before the end of the year.During the Federal Reserve Bank of Kansas City’s annual economic symposium here, many policy makers signaled that stock-market volatility and China’s woes haven’t seriously dented their view that the U.S. job market is improving, and that domestic economic output is expanding at a steady, modest pace.Inflation might remain low for longer thanks to falling oil prices and a strong dollar. Officials will continue to keep a close watch on markets and China. But they hope U.S. consumer-price inflation will start inching toward their 2% annual target as the economy’s untapped capacity gets used up, leaving them in position to start raising rates after several months of forewarning. … The Fed has said it will raise rates when it is reasonably confident the inflation rate will rise again to 2%.

http://finance.yahoo.com/news/stocks-plunge-1-dow-briefly-134504514.html#

Week #7 (Dec. 5): Module 7: Theory of an Open Economy; Aggregate Supply & Aggregate Demand; Monetary & Fiscal Policies

By Evelyn Cheng, Sept. 4, 2015 U.S. stocks traded sharply lower Friday ahead of the long weekend as investors digested a key jobs report that could provide the Federal Reserve with enough support to raise rates as early as September.The [U.S. Bureau of Labor Statistics] report showed that 173,000 jobs were created , missing expectations of 220,000. The unemployment fell more than expected to 5.1 percent, while average hourly wages increased more than expected by 0.3 percent, for a 2.2 percent gain over the past 12 months.Strategists said a decline in unemployment and an increase in wages could support the Fed's case for a rise in rates. Analysts also noted the August preliminary jobs number is often revised higher."I think the report is stronger than the headline. As a result it probably gives the Fed what it needs to raise rates in September but it also gives it cover if it decides not to," said Kate Warne, investment strategist at Edward Jones. "It does provide of evidence that the economy continues to improve."

(continued from earlier slide)A top U.S. official Tuesday expressed confidence that China’s government would be able to manage the downside risks of a slowdown in the world’s second-largest economy, but said Washington will be seeking greater clarity on Beijing’s policy strategy at a meeting of global finance officials later this week. U.S. Treasury Secretary Jacob Lew and his lieutenants will press their counterparts for details on how the government plans to prevent the economy from stalling, an event that could further shake world markets and stunt global growth.Chinese policy makers have vowed to ensure that economic growth hits the country’s target of about 7% for this year, which would still be its worst performance in more than two decades. Chinese Premier Li Keqiang said the economy was showing signs of improvement after a series of measures to boost growth, adding that more efforts were needed to ensure that expansion didn’t come up short, according to a government statement released Saturday.

http://www.wsj.com/articles/china-fears-sink-markets-again-1441154898

Week #7 (Dec. 5): Module 7: Theory of an Open Economy; Aggregate Supply & Aggregate Demand; Monetary & Fiscal Policies

http://www.wsj.com/articles/the-epas-next-big-economic-chokehold-1441149571?tesla=y#mod=todays_us_opinion

This fall the Environmental Protection Agency plans to take its next grand regulatory step, following the announcement of the EPA’s Clean Power Plan over the summer. The agency is likely to introduce stringent new standards for ground-level ozone, arguing that a lower allowable level of ozone—an important component of smog—will reduce asthma in the U.S., among other claimed health benefits. Yet the EPA ignores decades of data and studies, some under the agency’s auspices, that reveal no detectable causal relation between past reductions in ozone and better public health, including reductions in asthma cases.

Week #8 (Dec. 12): Module 8: The Economics of the Public Sector

http://www.washingtontimes.com/news/2015/aug/25/budget-deficit-smallest-obamas-tenure-cbo/?page=all

By Stephen Dinan - The Washington Times - Tuesday, August 25, 2015 The economy is sluggish but growing and inflation remains low, painting a decidedly mixed picture for the federal government, the Congressional Budget Office reported Tuesday, saying the fiscal situation is improving this year but will snap back by 2018 to swelling deficits and unsustainable debt.The inflation rate is so low that Social Security beneficiaries probably won’t get a cost-of-living raise after this year, the CBO said. But tax revenue is up and spending has stayed pat, which is helping reduce the pool of red ink in the federal budget.Combined, those numbers mean the government will run a deficit of $426 billion in fiscal year 2015, down about $60 billion from 2014 and marking the smallest deficit of President Obama’s tenure.Democrats saw the short-term outlook as progress and said it’s time to close tax breaks and bring in more revenue for spending on investments such as infrastructure. Republicans kept their focus on the longer-term warnings in the CBO report. They noted that taxes will remain higher than their historic average over the past five decades but deficits will persist because spending will still outpace revenue.Budget watchdogs pleaded with all sides to go beyond the numbers and talk about solutions to persistent debt.

Week #8 (Dec. 12): Module 8: The Economics of the Public Sector