This post references the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
and
7. Economic thinking is marginal thinking.
Recently, there was an interesting article in The Wall Street Journal that chronicled the choices made by a Texas family dealing with the current state of the economy. What made it particularly valuable as a classroom resource was how the piece linked the decisions faced by the family to the various businesses they use, and the firms being affected by the choices made by this family, and by others in similar circumstances. The story is a clear example of interdependence in the economy – how our choices affect others and how others choices affect us.
What on the surface seem to be small decisions on the margin of a family budget have a much larger impact in the broader economy, when multiplied. Consequently, the story makes a great connection between personal finance and the larger economy. And the graphic at the end of the story is extremely helpful in showing how interdependence works in the modern economy.
As always, your comments are welcome.
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2 comments:
It is a nice article for teaching how the multiplier works in reverse.
Thanks for the link, Tim. I plan to use it in my classes next week. By the way, there's an interesting article at the bottom of the page detailing the dominance of the college basketball world by teams from North Carolina.
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