Download econ and investment course outline

Mr. Misiunas
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Economics and Investment
Course Outline
I.
BASIC CONCEPTS OF ECONOMICS
A. Define Economics
1. scarcity
2. limitations
B. Define systems of economies
1. Capitalism, Communism, Traditional
a. definition
b. history
c. countries
C. Discuss importance of systems
1. East/West Germany
2. North/South Korea
D. Factors of Production
1. land
2. labor
3. management
4. capital
E. Opportunity Cost
1. short term
2. long term
F. Five Fundamental Questions of Economics
1. What and how much to produce?
2. How to produce?
a. labor intensive vs. capital intensive production methods
b. correct mix or resources
c. example: Cleaning the Streets of Snow in China (1972)
3. How to distribute what is produced?
a. Capitalistic Market distribution
b. Communist Command distribution
c. Traditional System distribution
4. How to define and achieve full employment
a. Labor force
b. Involuntary labor force (former Soviet Union)
c. Voluntary labor force (United States)
5. How to define and achieve the desired rate of economic growth?
a. capitalist growth = education + capital investment
b. seeking economic growth opportunity cost
c. failing to seek economic growth opportunity cost
6. How Traditional systems answer the Five Questions
7. How Communist systems answer the Five Questions
II.
MARKET ORIENTED EXCHANGE BASED ECONOMIES
A. The evolution of market oriented exchanged based economies
1. Hunting/gathering families
2. The advent of agricultural based families
a. specialization leads to expansion in productivity and trade
b. involuntary exchange
c. voluntary exchange
3. Barter oriented markets
a. Supply and demand
b. money and the value of money
B. Comparative Advantage
1. concept of Comparative Advantage
2. charts to illustrate comparative advantage of how two nations would benefit
from comparative advantage
3. Trading policies
a. What are trading policies and why?
b. NAFTA – misconceptions
4. Trade and Transition
III.
CAPITALISM AND THE FIVE FUNDAMENTAL QUESTIONS
A. Fundamental Question #1: What and how much to produce?
1. Allocation Function
a. consumer demand
b. technology increase
c. supply and demand
d. entry or exit of industries
e. consumer sovereignty
f. Invisible Hand (Adam Smith)
2. Allocation and Distribution Functions in Everyday Life and the Effect of
Consumer Sovereignty and Technologic Innovations
1. typewriters vs. computers
2. pinball vs. video games
3. beta vs. vhs
4. soft drinks vs. bottled water
5. mobile phone industry
6. modern technological corporate titans
3. Determining what to produce
1. laissez faire capitalism
2. centrally planned economies
3. regulated of mixed economy
4. where today’s countries fall on the right/left continuum
5. freedom and efficiency
B. Fundamental Question # 2: How to produce?
1. The role of Opportunity Cost
1. Strengths – self interest to be resource efficient
2. Weaknesses – ignoring pollution control, waging war
C. Fundamental Question # 3: How to distribute what is produced?
1. Basic factors that determine your share of the goods and services produced in
the economy.
1. value of productivity determined by consumer
2. how productive you are
3. degree of competition faced
4. socio-political factors
D. Fundamental Question # 4: How to define and achieve full employment?
1. The meaning of labor force
2. Frictional unemployment
3. Structural unemployment
4. Cyclical unemployment
5. effects of reducing frictional and structural to zero percent
E. Fundamental Question # 5: How to define and achieve the desired rate of economic
growth?
1. define economic growth
2. define desired rate of economic growth
3. Saving and Investment Process
1. how household saving affects investment in capital
2. how the federal deficit affects investment in capital
1) debt
2) national debt
3) deficit
4) entitlement programs
3. Japanese approach to capital formation
IV.
BASIC ECONOMIC ROLES OF GOVERNMENT
A. Legal System Framework
1. protect private property
2. enforcement of private contracts
3. truth in advertising
4. prohibiting mergers which reduce competition
1. monopolies
2. oligopoly
3. trusts
4. pools
5. cartels
6. mergers
5. colluding
6. tying agreements
7. bundling
8. predatory pricing
9. physically harming competitors
10. patents
11. zoning laws
12. license to practice
13. Food and Drug Administration (FDA)
14. Interstate Commerce Commission (ICC)
15. Fair Labors Standards Act
16. Global and Domestic Depressions and Recessions
17. Examples of Excessive Regulations
1. NYC Yellow Cabs
2. Discrimination
V.
INVESTMENT
A. Why invest?
1. Capital growth
2. loans
3. mortgages
4. debts
5. interest
B. Ways to Invest
1. Stock Market
2. stocks
3. bonds
4. money markets
5. real-estate
6. mutual funds
7. shares
8. interest
9. revenue
10. dividends
11. LLC
C. Stock Markets and Indices
1. Dow Jones
2. NYSE
3. NASDAQ
4. S&P 500
5. trading
6. brokers
7. blue chips
8. insider trading
9. trading algorithms
D. Financial planning
1. retirement planning
2. 401 K 403 B
3. tax shelter annuity
4. LLC
E. Case Study
1. Netflix
2. Fresh Direct
3. Google
4. Apple vs Samsung