Sorry, Mr. Bach!

April 19, 2007
Inflation rises to 2.3 per cent in March on higher gasoline prices
It seems like every time you drive pass a gas station, the price have just gone up a little higher. You scratch your head to a bloody scalp and wonder what you have to cut back on in order to accommodate this. It's a terrible fact, but what you're witnessing is indeed inflation, and it has risen 2.3 per cent as of March. Back in February the rate was 2.o per cent, it is only a 0.3 difference but every little bit affects the economy and it's quite noticable nonetheless. Not only is inflation apparent when it comes to gas prices, there is a 5.4 per cent increase in the cost of mortgages and a 6.9 per cent rise in homeowners replacement costs.

Inflation by citiesThe annual inflation rate was 2.3 per cent in March, says Statistics Canada. The agency also released rates for major cities, but cautioned that figures may fluctuate widely because they are based on small statistical samples.

Previous month in brackets.

St. Johns, N.L., 2.0 (1.4)
Charlottetown-Summerside, 2.6 (1.2)
Halifax, 2.2 (2.1)
Saint John, N.B., 1.4 (0.8)
Quebec, 1.6 (1.1)
Montreal 1.9 (1.5)
Ottawa 2.0 (1.7)
Toronto 1.7 (1.5)
Thunder Bay, Ont., 1.1 (0.9)
Winnipeg, 2.6 (2.3)
Regina 2.6 (1.8)
Saskatoon 2.5 (2.0)
Edmonton 4.6 (3.7)
Calgary 6.5 (6.1)
Vancouver 2.5 (2.8)
Victoria 1.9 (1.8)

News Article:
http://www.canada.com/ottawacitizen/news/story.html?id=8c4b7abf-67d5-4d34-a5a1-5889b867a712&k=59939

Relation to Chapter 5
Right now, I think Canada is experiencing demand-inflation, also known as "good inflation." It shows that our economy is on the rise which is a good sign. Inversely, if prices are going up, demands for higher wages will also go up, higher wages lead to higher costs for businesses and if a business has higher costs it needs to relieve ir to the consumers. Having this, it results in an increase in price. That, is cost-push inflation, where prices go up due to having a higher cost of business. There's always that age-old argument, is cost-push inflation really inflation? I'd like to argue that it's not, and it's more so just an aftermath of demand-pull inflation. If you have a rising economy where everyone is spending more and demand is greater than supply, eventually that rise will hit its apex and begin to decline. The point of apex would be where cost-push usually comes into play. The demand for higher wages causing expenses for businesses to increase leads to a higher price for supply. So you can't really compare to two types of inflation because you can't have one without the other occuring as well. Cost-push "inflation" is merely a result of demand-pull inflation.

There are only two things you can guarantee in life: death and paying taxes.

January 29, 2007
Income trusts: What's behind the change.
On October 31, 2006 Finance Minister Jim Flaherty changed the tax rules governing income trusts, removing much of the incentive for companies to convert from a corporation to an income trust. An income trust allows a company to avoid the double taxation that now applies to its income - first, the corporate taxes it pays, and then the personal taxes on dividends it pays out to its shareholders. Trusts manage to pay little or no corporate tax because they aren't corporations. Income trusts are simply vehicles that "flow through" interest, dividends and capital gains directly to their investors (called unitholders) as distributions. Now, Flaherty believes that these companies shouldn't have these tax breaks because trusts pay out so much of their income to investors that many don't make the internal investments necessary to build their businesses.

Relation to Chapter 4
This is when the federal and provincial government take responsibility when they feel it will better the economy and ultimately benefit themselves (and us, if you want to think about it that way.) If big corporations can actually find ways in not paying a higher income tax than they are suppose to, that means less money for the government. With the substantial growth in government spending, they need all that they can get. Every government seems to be in huge debt with their people, having expenditures on health care, education and social service. Taxes are imposed to provide revenue for the government and they should be, in all cases or the best to the government's ability, equitable. If somone does not have the financial back up to invest large sums of money into a stock, RRSP, or bonds, they will get taxed more opposed to someone who's making more but putting their money away. Income trusts was a big way for multi-million corporations to dodge the large tax bracket and relieve their profits to their investors, consequently not making economical changes to the business itself. A progressive tax method, one that Canada is using now, declares the greater your income the greater your tax rate will be. Sounds equitable, right? But if you're not declaring your true income, in some means, even if it's legal, can con a person to paying more. So when the government intervenes, we can soon appreicate the different responsibilities in which they provide.


News Article:
http://www.cbc.ca/news/background/personalfinance/incometrusts.html

I know doing income taxes is not one of my yearly routines, but I found the urge to hate it already. All this jargon about percentage rates, loop holes, and financial advisors just makes me feel like I'm not going to make any money if I work harder. The more you make, the more you get taxed and you jump into higher tax bracket which means your marginal tax rate is greater. That's why people like getting paid in cash, right? No paper trail, no declaration of income, no tax.

The Role of Government in a Market Economy, also known as Chapter 3. It discusses the advantages and shortcomings of a free-market system. A free-market system is a market with absolutely no government involvement whatsoever. Adam Smith, a Scottish philosopher, strongly believes a society with the attitude "every man for himself" would benefit in the long run because if everyone had the same self-interest, it would lead towards a common goal. But since we don't live in his ideal world, yes, the government does intervene in the market causing third-party effects, unmet public goods, and issues of privatization.

January 19, 2007
Edmonton aims to screen all for diabetes. A cost expectancy of about $15.6 billion, the government is now undergoing a new diabetes screening program making it a reportable disease. They believe diabetes, if not detected early and treated, can lead to much more serious problems such as blindness, loss of limbs, kidney failure and even death. By 2010, if you're going to the doctors, a walk-in clinic, or the hospital they will have your blood-sugar level recorded into a central database. This screening program would hopefully reduce the cases of diabetes and treat the patients who are at risk.

Doesn't this article relate to economics most relevantly? Because I did not just choose the first news article that popped onto the screen when I clicked "health", I did hard, pencil-chewing research I really did. If you choose not to believe me and wonder what does this article have to do with chapter 3, be prepared to be amazed, my friend. If all goes well, I'll be amazed myself.

So the government is trying to take action by declaring this new screening program for diabetes. This would definitely raise some eyebrows in Edmonton since the government is planning to invest $15.6 billion into this program. The third-party effect goes as follows: you head to your doctor's for a check-up, now instead of the regular you get a regular plus a diabetes screening; the third party comes in which is society and the effect may be higher taxes because these screening's do not sound cheap. It may become an unmet public good since it's being presented as a new regulation and you cannot necessairly charge anyone who is benefiting from this service. Should the government really go through with this new program? Or should it be the choice of the individual whether or not to participate? This sparks the debate on whether or not health care should be privatized and how much saying does the government get. If health care was privatized, I think barely any companies would take on this new program. Not only is it expensive, but it seems tedious to frequently update your blood-sugar level data. Having brought that up, you can always rebute by saying that North Americans have been intaking so much sugar in their diet that diabetes is one of the most common diseases. And it's about time the government is taking action to help slow down the rate of cases. Both points standing strong, I would have to lean towards the government's side for this one because testing for diabetes should be a grant more than a chore. Better safe than sorry, right?

News Article:
http://www.cbc.ca/health/story/2007/01/19/diabetes-database.html

I myself have one of the biggest sweet tooth ever, and I would like to see where my blood-sugar level stands. Though taxes may increase throughout the year because of the huge investment to fund this new program, I think many people will be amazed and would be grateful to be aware if they are at risk of diabetes. It might just give everyone a reality check, and will make you give some thought to your diet.

Chapter 2 was all about the operation of markets. We talk about supply and demand, quanitity exchange, and of course elasticity. We learned how are prices set and why they are the way they are. Lets not forget the infamous supply-demand graphs where we discovered the equilibrium price, does 'buy' and 'sell' and '$29' refresh your memory? It should!

November 7, 2006
Meat products recalled after discovery of syringe. Maple Leaf Foods had to recall their turkey and ham from Ontario grocery stores after a woman discovered a syringe slightly embedded to their product. Security has been increased after the incident, and we are still not informed how the syringe really got there. Ironically enough, their slogan is "The difference quality makes."

I'm guessing after this whole incident, the demand for Maple Leaf products would decrease. If I was a consumer of this product I would be horrified at the thought of a syringe being near the production of my food. Unless they need it for reasons I don't know about and I have not been clarified, but for now I'll just think they're using taste enhancing drugs even though no needle was said to be found in the site. This is a great opportunity for the meat market, since Maple Leaf is a huge competitor, this might just open doors for other brands who haven't had much business. People might consider trying new products and start shopping around. The change in quanitity demanded, I believe, would change drastically since ham and turkey are such common products and can be found elsewhere. Since ham and turkey have easy product substitutes, the demand for salami or bolonga might just go up. Supply of Maple Leaf ham and turkey would eventually go up due to the lost of sale, in which case the smart thing to do would be to lower the price until you regain the trust of your customers. The supply of Maple Leafs would remain the same, but the quanitity supplied might change if small grocery stores don't want to risk holding that certain product. Therefore, the demand-quanitity exchange graph would shift to the left. Ham and turkey are inelastic. Meaning, if the price changes by a small amount, the outcome of quanitity exchange would just be affected slightly. Ham and turkey are usually inexpensive, and they are pretty much in an average person's regular grocery lists. Especially to those who makes their own lunch everyday either for school or work. So having prices fluctuate by 10-20 cents, wouldn't change the mind of the consumer buying it. But having a news article questioning the health security during your production could do extensive damage. I'm pretty sure Maple Leafs could up their advertising and this whole thing would be wiped out of memories in no time. Syringe, what? We'll hear that response in a month or sooner.

News Article:
http://www.cbc.ca/canada/ottawa/story/2006/11/07/meat-cfia.html


I remember watching this story on the news and then picturing the Maple Leafs commercial. How they say they make quality meats the old fashion way and how they're so proud. Hah, what nonsense. But these things tend to happen all the time, it all depends on the aftermath promotions and public relations. If I was a regular buyer of Maple Leafs, I'd probably stop buying it for awhile just to be on the safe side. Eventually, once they reassure nothing like this would happen again, I'd be a sucker and give in.

In chapter 1, the core concept was to grasp the idea on opportunity costs and the law of diminishing returns. They talked about scarcity and how everything is considered scarce, especially natural resources that aren't renewable. We were introduced to graphs which help us determine whether or not prices and products have a positive relationship or a inverse relationship.

November 10, 2006
'Light' and 'mild' labels are to be removed from cigarette packages by 2008. Health officials say that the terms 'light' and 'mild' are deceiving to Canadian smokers who perceive that smoking a 'light' cigarette is better for them, in which case it's not. Tobacco is still as harmful in any type of cigarette, the 'light' label just means a lighter taste. Tobacco companies now have to sign a World Health Organization treaty to agree upon the new terms, so instead of labelling packages with 'light' or 'mild' they must give 'flavors' of some sort.

This article is pretty straight forward, but what does it have to do with Economics you ask? Well lets think about the opportunity cost for the tobacco companies who decided the sign the treaty. In a nutshell, the direct cost would be: having to design a new package and a lot of new promotion to regain customer loyalty. The biggest opportunity cost: the lost of 'light' and 'mild' cigarette smokers which would probably lose the company millions of dollars if these smokers actually believe that 'light' and 'mild' were better for their health in terms of the regular. Tobacco companies are a multi-million dollar industry, and cigarettes are far from scarce. So maybe putting production of any kind of 'light' and 'mild' cigarettes on hold wouldn't even come close to hindering their revenue. The law of diminishing returns states that if you maximize Land, Labour, and Capital your total revenue would actually decrease. So taking a break from making all those other cigarettes, and concentrating on promoting the regular might increase profits for the long run (although, I strongly hope not and wish that the world would smoke-free). You'd think because they have to change their label that the production-possibilities curve would shift to the left due to customers who stop buying the 'light' and 'mild' cigarettes. But no matter how many inhibitors that try to reduce the sale of cigarettes, for example attaching a picture of a smoker's lungs, people just keep on buying cigarettes and nothing seems to be slowing down that rate.

News Article:
http://www.canada.com/montrealgazette/news/story.html?id=a8c00572-5635-48e5-9003-a04ab5996bd8&k=12789


I seriously cannot stand smokers. They pollute our air, harm the people around them, and are basically just digging up their own graves. To be honest, I always thought that 'light' and 'mild' were 'less harmful' cigarettes. Boy, who ever chose those clever words sure had a good long run. Hopefully the removal of these labels would give a reality check to smokers and we'll see the demand for cigarettes to plummet. What's better than more money in your pocket, fresh breath, and cleaner lungs?