Thursday, February 14, 2013

Gasoline Prices Lesson Plan

Here is an outstanding lesson on gas prices and future expectations.

Here are just some goofy thoughts that are irrelevant to the gas prices.

Last weekend out boys swim team won the state swim title for the third consecutive year.  Right before the school assemble to honor these athletes, I heard a girl say, "I'm not going to the assembly.  How preppy is that?"  My thought processes went like this.  1.  Education plays a role in future earnings.  2) Winners in athletics often are winners in life.  3) The establishment favors the "preppy". 4) Why would anyone play a dominated strategy?  Are they setting themselves up for a lifetime of failure?

I was reading Krugman-Wells about income and expenditure.  The MPC has to be less than 1 in order for their to be a multiplier effect.  What happens if capital markets are broken and there's no saving or borrowing.  For example, if I expect my income to be higher next year, I might borrow today.  Or if I think I'll lose my job, then I will save.  but if capital markets are broken, then I would have to consume all of my income today so the MPC would be 1.  I never really understood the effects of future expectations on GDP. 

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