Feb. 28, 2010: Doctors cut back hours, study finds; Consumers not feeling so confident

Help broaden your students’ understanding of the underlying economic principals behind current events, as well as other more basic economic concepts.

FOR THE WEEK OF Feb. 28, 2010

Elementary

Article Link: "Doctors cut back hours, study finds," Feb. 24, 2010, The Denver Post,2A

Economic terms:

• Work:  the effort of a person as part of a job for which the worker is paid.
• Profession:  a vocation based on specialized education. The people in the profession supply services to others, for a fee or other money compensation. The profession includes a code of ethics that directs impartial service without regard to business gain that would negatively affect the client.  The person being served should be better off as a result of the professional service provided.  
• Fee:  the price consumers pay for services. 
• Survey:  a series of questions asked by a researcher in order to gain facts and understanding of human behavior.
• Adjusted for inflation:  adjusting economic facts based on how prices of goods and services change (usually increasing) over a period of time.
• Incentive:  is any factor that motivates a particular action or counts as a reason for someone preferring one choice over the alternatives.  Economists assume that incentives encourage people to behave in a certain predictable way.
• Workforce:  the number of people working for a single company or in an industry or profession. It can also apply to a geographic region like a city, country, county or state. 
  
  

Economic Concepts:

• Choice:  the process of judging the costs and benefits of taking an action before making a final decision. A simple example is deciding whether to get up in the morning or to go back to sleep.  In this article doctors are choosing to work fewer hours.
• Trade-off:  a situation that involves losing one quality or aspect of something in return for gaining another quality or aspect. It implies a decision to be made with full comprehension of both the costs and benefits of a particular choice.  In the article doctors are trading-off income for more leisure time.  It is important to consider opportunity costs when considering a trade-off situation.  Normally workers are willing to work more hours if they are paid more for those additional hours.  However, at some point workers will refuse to work because the opportunity cost of leisure time is greater than the increased pay.
• Self-employed:  a person who is working for herself rather than for another person or company. To be self-employed, an individual is normally highly skilled in a profession or trade.  In labor economics workers supply their labor to employers who demand labor.  The self-employed are both the laborers and the employers so they have greater control over their working conditions and hours worked.

• Consumer:  individuals and households who purchase goods and services.  Consumer spending accounts for about 70% of the U.S. economy.
• Index:  a single number calculated from a set of prices or quantities.  Economic indices (pl. of index) are designed to summarize a large amount of information and all comparison over different time periods.  Different indices have different component parts and different calculation methods.  It is important to understand how any index is calculated in order to make sense of it.
• Economy:  describes the total production, exchange and consumption of a country’s goods and services.  It is a measure of economic health.
• Consumer Confidence Index:  CCI is defined as the degree of optimism on the state of the economy that consumers are expressing through their future plans for saving and spending.  The CCI is issued monthly by The Conference Board, an independent economic research organization, and is based on a survey of 5,000 households. Such measurement is indicative of consumption (C) of the GDP.  The Federal Reserve Board looks at the CCI when determining interest rate changes, and it also affects stock market prices.
• Great Recession:  the term that many economists are giving to the current recession.  A recession is an extended period (6 months) of declining GDP.  It is expressed as a negative percent. 
• Job market:   job (labor) markets function between workers and employers. Labor economists look at the suppliers of labor services (workers), the demanders of labor services (employers), and attempt to understand the resulting pattern of wages, employment, and income.  During a recession jobs are lost and unemployment results.  During times of recovery jobs are created and the workforce increases.
  
  

Economic Concepts:

• GDP:  Gross Domestic Product consists of Consumer spending (C), Government spending (G), business Investment (I), and Net eXports (NX). 
  
  

Discussion: The article describes a recent survey index (the CCI) that shows consumers are very pessimistic about the health of the economy.  The Consumer Confidence Index fell to 46 in February.  This was down 11 points from 56.5 in January but up from 25.3 in February 2009.  Economists were expecting only a small decline so now they are worried that the economy will not recover soon.  This means that new jobs will not be created through business expansion and consumer spending.

Questions for discussion:Why do you think the Federal Reserve Board follows the CCI?  Why do you think investors in the stock market care about the CCI?  What is the connection between the CCI and jobs?  Why do you think this recession is being called the Great Recession?  How confident are you, as a consumer, feeling?  How confident is your family feeling about the economy?


Handy Dandy Guide
6 core economic Principals
Colorado Model Content Standards for Economics

Everyday Economics is written by Dennis Grogran, Program Director, Colorado Council for Economic Education. For information about CCEE's other programs, call 303-752-2323 or e-mail dgrogan@ccee.net.