Milton Friedman

             Milton Friedman was an economist in the 20th century who died at the age of 94 in 2006. He was born to a jewish family in New York and earned his BA from Rutgers University, his MA from University of Chicago and then his PhD from Columbia University. In 1951, Friedman received the John Bates Clark Medal honoring economists under age forty for outstanding achievement. In 1976 he was awarded the Nobel Prize in economics for “his achievements in the field of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy.” Before his awards, Friedman was an advisor to president Richard Nixon was president of the American Economic Association in 1967.

              Friedman was best known for reviving interest in the money supply as a determinent of the nominal value of output, which is the quantity theory of money. He co-authored, with Anna Schwartz, A Monetary History of the United States (1963), which was an examination of the role of the money supply and economic activity in U.S. history. A  conclusion of their research was one that had to do with the role of money supply fluctuations as contributing to economic fluctuations.  Friedman's  research and some theory supported the conclusion that the short-run effect of a change of the money supply was primarily on output but that the longer-run effect was primarily on the price level. Friedman was the main proponent of the monetarist school of economics. He maintained that there is a close and stable association between price inflation and the money supply, mainly that price inflation should be regulated with monetary deflation and price deflation with monetary inflation. He famously quipped that price deflation can be fought by "dropping money out of a helicopter." These are some of Milton Friedman's theories and beliefsm which lead him to be such an influencial economist.

Unemployment During the Recession

         Unemployment occurs when people are without jobs and have actively looked for work within the past four weeks. The unemployment rate is measured by dividing the number of people unemployed, over all individuals currently in the labour force. During a recession, the country's liquidity is not at its best. When this occurs, companies do either of the two things: 1) reduce unneccesary expenditure, or 2) reduce unneccesary workforce. This leads to unemployment because the company is in no position to expand, therefore the number of fresh employment positions wouldn't increase.
           The effects of unemployment are pretty serious and not only economic, but social too, especially for men. Studies have shown that men who are unemployed feel more depressed and have a lower self esteem. They are less likely to leave less satisfactory jobs This has to do with the stress of them not being able to support their families. Frequently, crime rates rise as people are unable to meet their needs through work. Divorce rates often rise because people cannot solve their financial problems.  The rate of homelessness rises, as do the rates for mental and physical illness.  Homes are abandoned and neighbourhoods are demolished. The ability of government to provide for people is also seriously compromised.  When there is high unemployment and a recession, people pay less in income taxes and also pay less in sales taxes because they purchase fewer goods and services. It's unfortunate, because even the people who remain employed, are affected by recessions aswell.

Unemployment Rate in Canada

The Demand for Coffee

       Demand in economics is defined as the desire to purchase, along with the ability to do so. The demand for coffee is usually determined by its price and availability of substitute drinks and consumer's tastes. When coffee prices rise, people do not reduce their coffee consumption proportionately and when the prices fall, consumers demand for coffee don't neccessarily increase that much. However, when coffee prices show a huge increase, the consumers tend to reduce their consumption proportionately. In 1976-1977, in the US, there was a huge cutback for coffee consumption, but recent studies show that the long-term decline for coffee has more to do with consumers tastes and preference as opposed to the price. Some people even say that the changing lifestyle of society has allowed soft drinks to compete with coffee as a social drink.
 
       The demand for coffee in china will most likely increase, since studies show that the coffee demand rises as literacy rate in a country grows. There is a huge correlation between the two, and since China is becoming more educated and literate, this is leading to a higher demand for coffee. Experts say that coffee prices will rise due to the decline production in Brazil and Colombia, since dry weather hurts harvests. These countries are two of the worlds largest coffee bean exporters. Starbucks says that the rising coffee prices will most likely decrease the price of milk, which has to do with the price of related goods.  Although China's demand for coffee will increase in the long-run, in the short- run, coffee demand is unlikely to rise because it is still very expensive and people are starting to prefer other more affordable drinks.

Dry coffee harvests in Brazil


Starbuck coffee in China

Opportunity Cost; Gas Cars vs Electic Cars

Opportunity cost is defined as the benefit that could have been gained from an alternative use of the same resource. There are many things in the world that can display this. I chose to talk about cars that use gas to run, versus cars that use electricity to run.  Gas powered engines are only 20 % efficient, the remaining 80 % from gasoline cars is lost to heat. Gas cars have a high opportunity cost since gasoline is very expensive nowadays and the price is only getting higher, due to scarcity and the fact that gas is a limited resource. Many people drive cars with larger engines and people live further from their work because they have easy access to transportation. This causes them to refill their gas tanks more often. All this gas coming out of car exhausts creates pollution in the environment which adds to global warming. Another resource of transportation is the electric car. Electric cars have the same features as gas cars do; speed, air conditioning, navigation systems, abs brakes, cruise control and airbags. Electric cars now use lithium-ion batteries which are eco-friendly, meaning they are not considered toxic waste and can be recycled. They are smaller, lighter, last longer and have a better recharge capability. Due to the fact that they are eco friendly and only need to be plugged into an outlet to be recharged, they have a low opportunity cost since they benefit the environment in the long run and avoid people refilling their gas tanks. This is how electric cars have a higher benefit than gasoline cars.

 Hydrocarbons + nitrogen oxides + carbon dioxide+ carbon monoxide coming out of a gas car's exhaust
 
 Inside an electric car