Why are some nations rich while others are poor?

Montesquieu, who in the mid-eighteenth century came up with a very simple explanation: People in hot places are inherently lazy.

Economist Jeffrey Sachs In the poorest parts of the world, he argues, nutrient-starved tropical soil makes agriculture a challenge, and tropical climates foment disease,
particularly malaria. Perhaps if we were to fix these problems, teach the citizens of these nations better farming techniques, eliminate malaria, or at the very least equip them
with artemisinin to fight this deadly disease, we could eliminate poverty.

Jared Diamond The origin of world inequality stems from the historical endowment of plant and animal species and the advancement of technology. cultures that first learned
to plant crops were the first to learn how to use a plow, and thus were first to adopt other technologies, the engine of every successful economy. Perhaps then the solution to
world inequality rests in technology

They ignore incentives. People need incentives to invest and prosper; they need to know that if they work hard, they can make money and keep that money. And the key to
ensuring those incentives, the rule of law and security and a governing system that offers opportunities to achieve and innovate.

The key difference between two nations who should be economically the same is that one of them enjoy law and order and dependable government services, they can go
about their daily activities and jobs without fear for their life or safety or property rights. On the other side, the inhabitants have institutions that perpetuate crime, graft, and
insecurity.

At the microlevel, we can help foreign citizens by educating them and arming them with the modern tools of activism, most notably the Internet. The U. S. must not take a
passive role in encouraging these types of movements. Our foreign policy should encourage them by punishing repressive regimes through trade embargoes and diplomacy.

The 1%

While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have seen their incomes fall. All the growth in recent decades—
and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old. The justification they came up with was called “marginal-
productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society.

The corporate executives who helped bring on the recession whose contribution has been massively negative went on to receive large bonuses. In some cases, companies
were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being
retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the
Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.

So what if this person gains and that person loses? An economy in which most citizens are doing worse year after year is not likely to do well over the long haul. There are
several reasons for this.

1) Shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most
productive way possible. distortions that lead to inequality such as those associated with monopoly power and preferential tax treatment for special interests
undermine the efficiency of the economy. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone
into finance rather than into fields that would lead to a more productive and healthy economy. modern economy requires “collective action”—it needs government
to invest in infrastructure, education, and technology. Reasons of the growing inequality

laboursaving technologies have reduced the demand for many “good” middle-class, blue-collar jobs. Globalization has created a worldwide marketplace, pitting expensive
unskilled workers in America against cheap unskilled workers overseas. Social changes have also played a role—for instance, the decline of unionsThe top 1 percent want it
that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the
wealthiest Americans close to a free ride.manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry
itself. The government lent money to financial institutions at close to 0% interest and provided generous bailouts on favourable terms when all else failed. Regulators turned a
blind eye to a lack of transparency and to conflicts of interest. U.S. senators are members of the top 1% when they arrive, are kept in office by money from the top 1% and know
that if they serve the top 1% well, they will be rewarded by the top 1% when they leave office. The key executive-branch policymakers on trade and economic policy also come
from the top 1%.

The top 1 percent rarely serve in the military—the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters. There is no limit to the
adventures we can undertake; corporations and contractors stand only to gain. The rules of economic globalization are likewise designed to benefit the rich: they encourage
competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as
the “core” labor rights, which include the right to collective bargaining.

Alexis e Tocqueville once described what he saw as a chief part of American society called “self-interest properly understood.” “properly understood” is different. It means
appreciating that paying attention to everyone else’s self-interest in other words, the common welfare is in fact a precondition for one’s own ultimate well-being. he was
suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s
good for business.

(Acemoglu podcast) Wall Street if you do stupid things and you lose a lot of money for your firm, you keep going. You make a lot of money, hundreds of millions of dollars
sometimes--as an individual. Even though you've destroyed your company. And you can stay in the game. hat already creates terrible incentives because you don't bear the
downside of the losses and you can make humongous amounts of money by being successful in the risks that you take. May not be as bad as you just said, but the incentives are
just awful.

So if you kind of compare Rajan's hypothesis to the alternative hypothesis I just laid out, politics is very important in both of them. In the Rajan story, the political responses
come because politicians are somehow responding to the discontent of the bottom of the distribution. Story Acemoglu suggests, politics is playing out by responding to lobbying
campaign contributions and otherwise the ability of the already well-off and already well-organized to influence and guide the political process. It's not technological change.
It's institutional change. It's the good-old technology that people have known for centuries: money begets you power

Limits of talking to politicians, First-decency of politicians limits it. Shame matters in economics we don't just want to rely on the decency of people. We don't want to deny the
decency or condone indecent behavior. But we want to make sure that incentives are right, so we don't have to rely on heroes. Second thing that limits that is political
competition. If one party is veering to a particular position, then the other party can take a different position that's more attractive to the voters and try to get more votes

When you have a quick worker next to you, you tend to follow along and try to catch up to their pace. Cashiers only go faster in their work when someone else who is fast is
looking at them. Bosses tend to search for informal ways to reward their good employees. Tournament theory is that workers can be rewarded based on their rank in an
organization, explaining the reason why large salaries are paid to senior executives. This is done to provide a prize or reward to workers who put in enough effort to earn a top
position. Reloadable option which is where CEOs get paid rewards if their share prices bounced around a lot. Backdated is where companied hand out generous options but
disguise them by doing it before the prices rose therefore making it much more valuable. He gives an example of how in restaurants you don’t notice how they take money from
you until the bill comes same thing with shareholders, they can feel the money going out of their pockets but they cannot do much.

covid calamity will prompt a long-overdue phase of technological and social experimentation, neither business as usual nor a fatal blow to the office. This era holds promise but
also brings threats, not least to companies' cultures. Instead of resisting change, governments need to update antiquated employment laws and begin reimagining city centres.
But rather than resist technological change, it is far better to anticipate its consequences. Two priorities stand out. First, a vast corpus of employment law will need to be
modernised. Already the gig economy has shown that it is out of date. can firms monitor remote workers to assess their productivity? Who is liable if employees injure
themselves at home? Any sense that white-collar workers are getting perks will create simmering resentment in the rest of the workforce. The second priority is city centres.
For a century they have been dominated by towers filled with swivel chairs and tonnes of yellowing paper. Now complex urban-planning rules will need a systematic overhaul
to allow buildings and districts to be redeveloped for new uses, including flats and recreation.

The historical experience with agriculture is, in fact, an excellent illustration of the so-called "Luddite fallacy." This is the idea--and I think it is generally accepted by
economists--that technological progress will never lead to massive, long-term unemployment. As labor-saving technologies improve, some workers lose their jobs in the short
run, but production also becomes more efficient. That leads to lower prices for the goods and services produced, and that, in turn, leaves consumers with more money to spend
on other things. When they do so, demand increases across nearly all industries--and that means more jobs. That seems to be exactly what happened with agriculture: food
prices fell as efficiency increased, and then consumers went out and spent their extra money elsewhere, driving increased employment in the manufacturing and service sectors.

That then suggests a world where workers must take more time investing in specialised skillsets, which are increasingly likely to be rendered obsolete. This should encourage
workers to move into creative fields that are highly adaptable to structural changes in the economy, but not everyone is cut out for such positions.

POVERTY

Household annual income does not account for: In kind transfers which are assistance that takes form og goods and services rather than cash. The economic life cycle which is
the regular pattern of income variation over a person’s life. And the transitory versus permanent income which is the people’s income varies because of random transitory
forces. Permanent income is a better measure of inequality.

Economic mobility includes income inequality is more concerning if people are permanently poor or rich, persistence of economic success from generation to generation and
millionaires. There are forms of political philosiphers views of the role of the government in these situations they include:

Utilitarianism, which is a government who redistributes the income, liberalism which is a government who choose policies that aim to maximize the well being of the worst-off
person in society and libertarianism which is a government that should not redistribute the income and that aim for equal opportunities rather than equality of income.

Poverty line is an absolute level of income set by the government for each family size which a family is deemed to be in poverty.

Poverty rate is the percentage of the population whose family income falls below poverty line.

Poverty is associated with various economic and social ills Homelessness, drug dependence, health problems, teenage pregnancy, illiteracy, unemployment, low educational
attainment More likely to commit crimes More likely to be victims of crimes Most people believe government should provide a “safety net.”

Policies To Reduce Poverty 1. Minimum-wage laws • Arguments for: • Helps those on low income without any cost to the government. • Little impact on employment if
demand for unskilled labor is relatively inelastic. • Arguments against: • In the long run, demand for unskilled labor is likely elastic, so minimum wage causes unemployment. •
Those helped by minimum wage are more likely to be teens from middle-income families than low-income adult workers. 2. Welfare: • Government programs that supplement
the incomes of those below the poverty line. • Critics argue that such programs • Create incentives for people to become “needy” • May encourage families to break up • May
encourage illegitimate births • Exacerbate the very problems they are supposed to cure. 3) Negative income tax: • A tax system that collects revenue from high-income
households and gives subsidies to low-income households 4. In-kind transfers: Goods or services provided to those living below the poverty threshold. For example, •
Homeless shelters • Soup kitchens • Food stamps • Access to healthcare • An alternative: Cash payments • Would allow people to buy what they most need • But could be
used for other items such as illegal drugs or alcohol.

Rokia experiment: That people would want to give money to identifiable victims like Rokia rather than unnamed famine victims may not seem all that surprising. But
Small and her colleagues, in a series of field experiments, delved deeper into the issue of sympathy and how it relates to charitable giving. The researchers found that
if people are presented with a personal case of an identifiable victim along with statistical data about similar victims caught up in a larger pattern of illness, hunger or
neglect, overall donations actually decline. In addition, they found that if people are told about the inconsistent levels of sympathy evoked by identifiable and
statistical victims — the “identifiable victim effect,” in the words of the researchers — people reduce their giving to identifiable victims but do not increase their
giving to statistical victims.

Infant industries: As a country to have industries who aren’t competitive enough because they are new industries and because of that governments put protection policies on
them. The drawbacks is instead of getting competitive they start to do rent seeking activities which is going to the policy makers and extending their policies for a longer time so
instead of getting competitive they take their resources and try to extend their time of being protected.

School is for mobility: Education changes lives in ways that go far beyond economic gains. The data show clearly that children who get better schooling
are healthier and happier adults, more civically engaged and less likely to commit crimes. Schools not only teach students academic skills but also noncognitive skills,
like grit and teamwork, which are increasingly important for generating social mobility. Even the friendships that students form at school can be life-altering forces for social
mobility, because children who grow up in more socially connected communities are much more likely to rise up out of poverty.the evidence is clear that teachers are
critical; Children also benefit from longer school days, greater access to special education and less aggressive cutoffs for holding students back a grade.

School is for wasting money: I have deep doubts about the intellectual and social value of schooling. My argument in a nutshell: First, everyone leaves school eventually.
Second, most of what you learn in school doesn’t matter after graduation. Third, human beings soon forget knowledge they rarely use. Strangely, these very doubts imply that
the educational costs of the coronavirus pandemic are already behind us. Some researchers found that being in Zoom school was about equivalent to not being in school at all.
Others simply found that test scores rose much less than they normally would. But given my doubts about the value of school, I figure that most of the learning students lost in
Zoom school is learning they would have lost by early adulthood even if schools had remained open. My claim is not that in the long run remote learning is almost as good as
in-person learning. My claim is that in the long run in-person learning is almost as bad as remote learning. College graduates know about what you’d expect high school
graduates to know; high school graduates know about what you’d expect dropouts to know; dropouts know next to nothing. This doesn’t mean that these students never knew
more; it just means that only a tiny fraction of what they learn durably stays in their heads. This is especially clear for subjects beyond the three R’s — reading, writing and
arithmetic. Schools have been trying to overcome reading, writing and math deficits among underperforming students for decades. Boosting their performance in the short run is
quite doable. The recurring problem is fade-out; the effects of interventions diminish or disappear over time.

If we set aside wishful thinking and calmly reflect on what happened to education during Covid, we learn two valuable lessons. First, schools before Covid gave taxpayers a bad
deal, taking lavish funding while imparting little long-term knowledge. Second, schools during Covid gave taxpayers an even worse deal, enjoying massive emergency
funding while refusing to provide at least day care in exchange.

Why Is College Worth It? 3 Reasons to Consider College Graduates Earn More Than Non-Graduates 2. The Majority of Jobs Require College Education 3. College
Graduates Are More Likely to Have Health Insurance

3 Reasons Why College Is Not Worth It You Likely Will Graduate With Student Loan Debt 2. High-Paying Jobs Aren’t Guaranteed 3. It Can Take More Than Four Years to
Graduate
Unemployment Benefits and Actual Unemployment: It’s not that workers decide to live a life of ease on a fraction of their previous wage; it’s that they become more willing to
take the risk of being unemployed for an extra week while looking for a better job. one way to think about this is to say that unemployment benefits may, perhaps, reduce the
economy’s speed limit, if we think of speed as inversely related to unemployment. So pretty much the unemployment benefits does not increase unemployment it increases the
time it takes for somebody to find a job since they have the money now to take their time while searching for a job.

Moreover, the benefits to a college education are transportable. You take your degree with you when you move or change jobs. The value of the degree may change with
location or occupation, but an investment in higher education is unambiguously more conducive to mobility than an investment in a home.

The willingness of Americans to do a job depends on how much that job pays and the reason some jobs pay too little to attract native-born Americans is competition from
poorly paid immigrants. modern America is a welfare state, even if our social safety net has more holes in it than it should—and low-skill immigrants threaten to unravel that
safety net. Basic decency requires that we provide immigrants, once they’re here, with essential health care, education for their children, and more. Unfortunately, low-skill
immigrants don’t pay enough taxes to cover the cost of the benefits they receive. Guest Worker: A guest worker program allows foreign workers to temporarily reside and work
in a host country until a next round of workers is readily available to switch.

GLOBALIZATION

One narrative stresses the role of technology, especially the rise of containerized shipping. David Hummels, points out, there has also been a large decline in the cost of air
transport, which is a surprisingly big factor: Only a tiny fraction of the tonnage that crosses borders goes by air, but air-shipped goods are, of course, much higher value per
pound than those sent by water, so airplanes carry around 30 percent of the value of world trade. An alternative narrative is policy. That’s the narrative one often sees associated
with Trumpists : Globalists pushed to open our borders to imports, and that’s why foreign goods have flooded into our economy. there was a trade policy revolution in emerging
markets, which had high rates of protection in the early 1980s, then drastically liberalized. Here’s the World Bank estimate of average tariffs in low and middle-income
countries:

You might ask why a reduction in emerging-market tariffs — taxes on imports — should lead to a surge in emerging-market exports.. Basically, nations can choose to be
inward-looking, trying to develop by producing for the domestic market, or outward-looking, trying to develop by selling to the rest of the world.

Globalization is a good thing because the world of economy is now richer because now rich countries are now doing the things that they do well and making other countries do
what they can do well. the entire world gets richer, and We can now make more efficient product.

Disadvantages is that lowers education workers in advanced countries are hurt by import and the inequality Many people think that it is bad because that these people working
in developing countries are being hurt even more however it is these developing countries become richer and poor people can create some sort of money for themselves.
Globalization is driven by people looking for profit, and it also produces an integration of thought.

Runaway cost: rising quickly in a way that is not under control

How should you think about these trade-offs?

The first principle is to be systematic. The $60,000 benefit to American households, as in all cost-of-life calculations, is not real cash but an accounting measure that helps
compare very different things such as lives, jobs and contending moral and social values in a complex society. The bigger the crisis, the more important such measurements are.
A second principle is to help those on the losing side of sensible trade-offs. Workers sacked in forced shutdowns deserve extra help; children who no longer get meals at schools
need to be given food. A third principle is that countries must adapt.

Factors that shift the market deman curve include, 1) Increase in human capital which is the accumulated knowledge and skills that workers acquire from formal training and
education. 2) Changes in technology improvements in technology allow workers to be more productive 3) changes in the price of the product 4) changes in quanyity of others
inputs 5) changes in number of firms in the market. Factors that shift the market supply curve of labor changes in population, changing demographics, changed in alternative
opportunities Determining of wages compensating differentials (unpleasant job- higher wage), human capital (education, peoples investments, higher productivity), ability,
effort, and chance. Increase value of skills is due to the increase in international trade and changed in technology

MARSHAMALLOW EXPERIMENT: Marshmallow test was when children where told they could get one marshmallow or not eat it and wait and then get a second
marshmallow. Kids start to distract themselves. People always choose what is best for them that is the economists’ theory and that people have self-control. Self-control is work
not just something just comes to us, it is work that people must put in Sam bowls thinks that people think that everyone is selfish and that policies are designed base don the fact
people are selfish.

FIREMEN EXAMPLE: Firefighters used to have unlimited sick days, but the administration thought that they were abusing that power because most of their calls would come
on Fridays and Mondays, so they decided that they will now limit their sick leaves and if they exceed the number of sick leaves their pay will become less. This caused the
firefighters to feel as if they were not trustable because most of them did not call when they were not sick. They were angry and it happened before Christmas so people during
Christmas a bunch of people called during those times and what happened was their bonus was taken away. Later they realized that when they set a limited number of sick
leaves there were double the amount of people calling in sick especially during new years and Christmas. It backfired because the way people started thinking about their sick
leave changed, when there was unlimited they would take sick day when they were actually sick and harmed and they would take as much as they need to heal, so when the rule
changed people would start to think that the limited amount of days they have they will now use when the year is almost up if they haven’t used it yet even if they aren’t sick so
they can just use of the days they have.

DAYCARE EXAMPLE: Where a day-care started fining parent who were late but it backfired. Sam bowls argues that policies that are made to discourage bad behaviour
would work better if it was to encourage good behaviour. The concepts of crowding out and crowding in. Incentives can either crowd in people which will amplify motivation to
work more and have a positive outcome or it will crowd out and make them do it less or have a negative outcome.

IRELAND EXAMPLS Ireland wanted to reduce the plastic bags; they made an incentive which was a tiny cost for the plastic bags. This is different from the day care was
because during the day care the only people who see you picking up your kids late are the other parents who are late and the teachers and there was no explanation. In Ireland
there are other people watching you and waiting for you to answer to buy the plastic bag, it is a public thing and Ireland explained how it was a better thing for them to stop
using plastic bags since they are trashing their country and the public part showed disapproval if you bought the bag.

PLAYING SPORTS-HOT-HAND FALLACY this is when a person has a belief that when they succeed with a random event, they have a greater probability of succeeding in
additional attempts.When a basketball played keeps making their shots, they say they have hot hand, and they cannot miss the relation to BE is that out judgement and
perception on things can get clouded by false signals the player does not have hot hand that just have luck.
TAKING AN EXAM-SELF-HANDICAPPING this is a strategy people use to avoid effort to prevent damage to their self-esteem, When a student does badly, they will just say
they barely revised or studied as an excuse even though they did study a lot, but they just say they did not revise a lot or study to not hurt their ego. The relation to BE is that
people put obstacles in their own paths to manage future explanation for why they succeed or fail.

GRABING COFFEE-ANCHORING this is the process of planting a though in a person’s mind that will later influence their decisions Starbucks makes themselves different
from dunking through their names and their store. This is what made Starbucks overcome Dunkin and pay more for their things. Relation to BE is that Starbucks coffee is more
expensive than Dunkin’s however “loyal” Starbucks costumers who are conditioned to think Starbucks is better and different are willing to pay the inflated price even though
the coffee is the same.

PLAYING SLOTS Principle is GAMBLERS CONCEIT this is when a person has this huge belief that they can stop the risky game while they are still playing it, When a
gambler says they will stop the game when they win, or they can quit when they want to at the roulette table or the slot machine, but they do not stop Relation to BE Players
keep playing because they have an incentive to either keep their streak or win back the money they have lost; they keep engaging in this risky behaviour against what is in their
best interest.

TAKING WORK SUPPLIES-RATIONALIZED CHEATING is when the individual rationalize cheating, so they do not think they are a bad person. A person takes supplied
from work than the equivalent amount of money in cash Relation to BE people are more likely to rationalize their behaviour by framing it as if they are “taking something then
they are stealing it when people gain a psychological distance from their actions them wanting to cheat will increase.

Some incentives are biological; for instance, we instinctively pull our hands away from a hot flame (a negative incentive). But most incentives have to be created artificially;
this means that incentives are always changing. Another way to classify incentives is to label them as economic, social, or moral incentives. Teachers would put false test scored
just to be able to gain a raise. it seems almost impossible to measure whether sumo wrestlers’ cheat: sumo wrestling is such an unpredictable sport that it would be difficult to
separate legitimate matches from rigged matches. A 7-7 wrestler will have a very strong positive incentive for winning a match An 8-6 wrestler will have a smaller incentive.
An 8-6 wrestler has a strong incentive for accepting a bribe and very little Sometimes, he would find that people hadn’t obeyed the honours system and had eaten bagels without
paying for them. Sometimes, Feldman would leave collection boxes at his various companies, and come back to collect the boxes later. Although company employees would
occasionally eat bagels without paying for them, very few people would steal the collection boxes themselves. People will occasionally “cheat” by eating bagels without
paying, and yet they will almost never steal entire boxes of money, despite the fact that their economic incentive for stealing boxes is much greater than the economic
incentive for stealing one bagel. Feldman’s example tells us a lot about what’s usually called “white-collar crime.”

Harford first asks the reader to think about why big businesses, such as Starbucks, whose product is relatively simple, can profit so heavily. The main reason for this, states
Harford, is the location of said businesses. By placing themselves in busy settings with commuters who are in a time crunch, it allows Starbucks to earn a considerable profit.
This is an example of bargaining strength and scarcity.. Harford also addresses people being ripped off by big businesses, and the topic of of competition. He explains that as
more aspiring farmers come for meadowland, the amount of available meadowland decreases. Due to the fact that the meadowland is the only land that is extremely good for
farming, aspiring farmers are willing to pay any price to have a current farmer evicted so they can take their land. But the current farmers want the land too, so they are willing
to pay anything to stay on their land. This gives the bargaining power to the landlords because there are so many farmers available, and so little meadowland available.

Price theory an economic theory that states that the price for any good or service is based on the relationship between its supply and demand. Naïve price theory is when people
make assumptions about the outcome of prices or situations Rental contracts: A law is made that landlords have to give 6 months’ notice before kicking a tenant out. This
causes an issue for the landlord since now they cannot kick bad tenants out faster. An assumption is made that the prices wont change because of this law because why should
it? There is no correlation however this assumption is false. Landlords will raise the prices since now their operating cost will be higher because bad tenants will stay longer, and
they must make the place more attractive so better tenants move in. Lightbulb example: A company which has a monopoly on the lightbulb industry created a new lightbulb that
works ten times longer, this means they will be selling less lightbulbs than before because people will not have to rebuy the product. People assume that the company will be
selling this bulb for the same price as the ones they had however this assumption is false because people who are willing to pay multiple times for new lightbulbs are willing to
pay higher for the new ones since they will have to purchase it sell.

College-educated women seem better positioned than other women. High earnings make them attractive to potential marriage partners and improve their bargaining power,
which helps them persuade men to take on more responsibilities for family care. Men experience a different, often less costly trade-off. Educated women have a bargaining
power not only in their person marriage life but also in the workplace since they can bargain to be paid the same amount as a man because of their education because the same
or higher.

Eastelirn said that wealthier people in any country are to the ones that say they are happier with their lives rather than the poor people in the same country. Easterling also found
that when countries get richer the people do not become happier and this goes back because people don’t focus on the amount, they have they compare themselves with others
because they want to have more. Factors of happiness: 1) happy people tend to spend time with friends and family and put emphasis on social and community relationships. 2)
is based on the concept of "flow." 3)l in control of their own lives.

Economics need data to justify their claims and back up their theories to be believed by the people. When economists do not have data, they cannot compare their findings. Data
helps compare the present and the past by using past data people now can see how much economist have grown and become better or have lost their value. It can help have a
better-informed discussion.

MONEY: The functions of money include: Measure of value (Values expressed in money prices (helps comparisons)), Store of value (a way to store wealth over time), and
medium of exchange which is accepted in buying and selling (reduce transaction costs)). Inflation is the rising of prices and is best measured by using the consumer price index.
Inflation is caused by all periods of significant sustained inflation have been accompanied by increases in the money supply. Inflation alters incentives and people economic
behaviour as well as negativlet impact the economy as a whole. Money is an innovation that significantly improved the operation of markets. ● Banks facilitate the operation of
markets by expanding the quantity of money in circulation. ● Inflation is a consequence of the money supply growing faster than production. ● The Fed manages price and
interest rate levels by changing the m one y supply or paying interest on reserves. ● Inflation creates disruptions and losses in the overall economy as buyers and sellers act to
avoid its effects.

POPCORN: The author does not agree with those who state that the movie theatres have a monopoly. He gives an argument about raising movie ticket prices however making
the popcorn much cheaper which causes people to buy much more popcorn, but this may attract popcorn lovers, but it will also drive away movie goers and the point of a movie
theatre is to provide for movie goers. Reservation price is the most amount a person is willing to pay for something. Producers want to match the persons reservation price and
a set a price that if someone loves popcorn, they would be willing to pay that amount at movie theatres. Printing discount coupons on newspapers aren’t made to lure in
customers but are used to lure in a certain class of customers. Price discrimination is when the same product is sold at more than one price. Later in the story the author talks
about economists Luis locay and Alvaro Rodriguez talked about how people go to movie theatres in groups and how they cannot split up their group that consists of no popcorn
lovers and popcorn lover just because another movie theatre offers popcorn for less but tickets for more.