by Scott Cawfield
School of Business
Centennial College

Is Economics Useful?

As someone who has taught economics for over twenty years, I have found that a few students in each class think that economics is "useless, because it's all about graphs and curves." They imply that because the subject employs mathematical methods to establish and to test relationships, it is "not realistic." What they come to understand is that business enterprises use arithmetic computations to measure such things as revenue, expenses, net income/net loss, and cash inflows and outflows. These measures don't make business less realistic. In fact, the practice of business would be chaotic (and perhaps impossible) without measuring results, which are often based on computations.

The study of economics will provide you with at least five thinking and life skills.

1. Economics provides us with a classification system for economic phenomena, and thus a valuable way of thinking about the world. For example, most of us have had a notion of a good's price ever since we started buying things. However, economics teaches us the concept of all prices in an economy through the concepts of aggregate expenditures and gross domestic product (GDP). There are other total aggregates for any economy that are important to compare year to year-the total number of employed, the total number of unemployed, the total number in the working-age population, the total number in the labour force, and many other macroeconomic statistics. A study of microeconomics provides the student with a thorough knowledge and some key working tools concerning how individual units of the economy function, while macroeconomics provides the student with a knowledge base and some tools to understand how an entire economy functions. Without such knowledge, it would be difficult to classify economic phenomena and think conceptually and logically about economic matters.

2. Economics gives us some valuable working tools to analyze how an economy is performing, or underperforming. We can compare year over year real GDP, for example, by adjusting nominal GDP (the total expenditure on goods and services in any economy, and total incomes) downward to allow for increases in the price level. Thus we can measure economic expansion in any economy by continuous increases in the real GDP or measure a recession, which is defined as two successive declines in real GDP. Whether you are a businessperson, a macroeconomics student, a business analyst, or an interested citizen, you need such concepts to measure an economy's performance. Without these valuable tools in microeconomics and macroeconomics, we would lack a common framework of analysis of economic performance.

3. Economics teaches us how to more intelligently read about and evaluate for ourselves our society, economy, and its policy-making processes. The Canadian Liberal party claims that they are the best political party to govern the country. In a democratic country, this is for the electorate to decide. Al Gore, the Democratic candidate for President in the 2000 U.S. election, ran his campaign on the same premise. It is not easy to appraise these claims, but a knowledge of economics helps a voter to become more informed about economic management issues (and they are frequently intertwined with political structures and issues) in society, and to assess critically what political leaders have to say in any situation. An example of such a critical appraisal of events in the U.S. and Canadian economies in the first part of 2001 follows

4. Economics teaches us how to develop an awareness of the potential of the growing integration of the world economy.Business has been vastly changed in recent years. The effects of computer use have been felt in all sectors, from automobiles to finance and banking. Vast new markets have been opened up through e-commerce. Markets themselves, once thought of as involving direct, usually face-to-face interaction between seller and buyer, are changing in nature. New "markets" have greater scope and are more anonymous in nature. For the right kind of business people, they are also more lucrative. Businesses can now reach markets with information never before possible. A person with the right qualification in Sri Lanka or Taiwan can shop for a job in New York. Students doing research have access to an array of helpful research materials not just in subject areas, but right down to subject topics. If you ask Lycos for Web sites on macroeconomics, for example, it reports 102,918 sites are available; a few years ago, the student doing a similar search using the card catalogue in a library might have found a few hundred entries. In my view, these resources help make learning about the global economy a far more rewarding and critically important experience than in the past. You may not just want to study the global economy. You may want to participate in it and use Web resources to research your business proposal or launch your e-commerce business. I also think that the World Wide Web makes learning more fun! We are going to say more about Internet research later in the section on "Using the Internet for Research in Economics."

5. Knowledge of economics is required in many careers. Refer to the section of this site entitled "What Can I Do With my Economics Degree?" for more information on career preparation, educational preparation and job possibilities in economics and related fields.

PART 3 - Time and Stress Management in Studying Economics

Many students complain about the length of time it takes to read and understand economics, and to do assignments. In some subjects, the reader can develop a flow very easily, jot down only a few points, and use them later for review purposes. I am not so sure that this is the case in reading economics. For understanding, economics demands going beyond the basic text to study formulae, graphs, tables, and possibly some additional material on applied issues and controversies. Students have reported to me that it takes them five to six hours, or longer depending on English comprehension skills, just to read effectively one chapter of the text. Don't be hard on yourself for this, just schedule more time for the subject and follow the helpful tips provided below.

Unfortunately, as you complete your economics homework you may also be aware that you have work to do in other courses, and things to do in your personal life. You may have to submit an organizational behaviour report, do a statistics assignment, read a few more chapters of consumer psychology, attend sixteen hours of classes, get ready for that business planning mid-term exam, send that birthday card to Dad, play some hockey or do some swimming at the recreation centre, and have a little "down-time" to chat with your friends.

To help you deal with these demands on your time, here are seven useful time management and stress-busting strategies:

1. Get a time planner and use it every day! Before each week begins, use your planner or electronic organizer to schedule your immediate priorities and future important events. You need a monthly calendar to plan for things coming up a few weeks or months later, such as assignments, mid-term examinations, or major quizzes. Use your planner to set overall goals and objectives, to remind yourself of commitments, to schedule key events, and also to assess where your hours are going, especially if it is becoming apparent to you that you need to use your time more carefully.

2. Set annual, monthly, weekly, and daily goals and objectives, and prioritize them. Setting long-term and more immediate goals and objectives will shape your path toward achieving them because you are aware of progress, or lack of it, at all points. Also, you will enjoy life more, largely because you have built into your schedule time for yourself. Staying well ahead of commitments for which you have to be prepared will vastly reduce your stress level. Overall goals and long-term objectives are things like "Achieve a B+ or an A in Economics 220," or "Graduate from York University's Bachelor of Business Administration Program by June, 2003." Objectives that are more short-term include, "Finish all my assignments this year on time, and achieve a minimum of B+ on all of them," "Improve my fitness level by participating in three sports this semester," or "Improve my English speaking and grammar skills this semester." Setting goals and objectives represents recognizing the opportunity costs of wasting time such as chatting on the computer too much or spending too much time on your athletic or social development. The cost could be forfeiting your year, especially since certain schools and professional organizations require a high average for continuation or admission to their programs. You can prioritize in a number of ways, but here is one system. Use a PRIORITY A NOTATION for the most important activities in your life, such as "Prepare the microeconomics assignment due March 17th," "Meet my Economics 220 study group this week," or itemizing all your classes this week. Use a PRIORITY B NOTATION for routine activities-shopping, cleaning, exercising, or travelling to college or university. Use a PRIORITY C NOTATION for activities you want to do but can easily reschedule, such as social phone calls or going out for an evening.

3. Don't procrastinate or spend too much time on any one activity. Be completely straightforward about your goals, objectives, and priorities, and stick to them, even if friends complain. You have made some clear decisions about your future, even if they have not. A time management author once calculated that we can accomplish better than 80% of what we write down and become committed to seeing it accomplished. If you want to accomplish 20% or less of your goals and objectives, don't write anything down.

4. Don't be too ambitious! You need to be ambitious to succeed, but trying to study for ten hours without breaks when you're under pressure may be too much for you. Part of keeping a planner is getting to know how you work most effectively. You may find out that you are efficient in studying or writing only to the third hour of continuous work. If that's the case, schedule two or three two-hour blocks of study, and take up to one-hour breaks to walk, watch TV, or chat. Also, a blockbuster day of ten hours of work could make it impossible to function effectively the next day, just when you had to give that presentation in Business Planning

5. Be an activist learner. A study technique that is increasingly becoming important is to be an activist in your study habits. Some students spend seemingly endless hours staring at a book-this is not learning! Learning is active: Look for the study objectives and highlight material where the author is really answering the question posed in the objective or is providing summary material. Try some of the end-of-the-chapter material, which applies the material to issues, exercises, and problems. In some schools, students can do practice test questions from a computerized test bank available in the computer lab. Or, if you are studying economics using a Pearson text (check the material at the front), you can access the companion Web site available for the text you are using in your course. There are links to these sites through this Web site.

Use the material related to your particular text. This could be a very valuable use of your time, since you will have a chance to test your knowledge base. If you find that you are having difficulty studying or reading and comprehending information, stop into the counselling/student services/career services department of your college or university, and ask them about personal assessments or special seminars. If you tap into the right resources, any such deficit can be overcome.

6. You don't have to say "Yes" to everything. Learn to say "No" to unreasonable time demands. Drop optional courses that don't fit with your overall goals. The fitness club will still be there in late April, when you can unwind after all your exams are over. Chatting on the Net may be a colossal (and costly!) waste of time! Watch the phone too; it can be a huge time-waster.

7. Be careful about part-time work commitments. Currently, more students are concerned about the rising cost of post-secondary education, and may need to work in order to pay for it. Or, they may be interested in having practical work experience on their resume. For some, the number of hours worked is about equal to the number of hours they give to their college or university work. You can make $800.00-$1,000.00 a month working at Tommy's Sports Store, but is this work worth it if the real cost of that income is possible failure in two subjects and poorer health because you are working 60-hour weeks? Focus on your long-term goal (graduation from the program you are in, a satisfactory rate of return on your educational investment), and avoid any commitments that might distract you from it.

PART 4 - How To Take Effective Notes In Economics

Effective note taking performs many valuable functions for you and your peers. This section is divided in two: "The Six Functions of Note Taking" and "Ten Strategies for Effective Note Taking."

The Six Functions of Note Taking

1. Taking notes in class and making your own notes at home or in the library, will help you listen more effectively in all situations. Even when you are reading, you are listening to someone's presentation. Listening is a vital life skill, because it will be indispensable in business and other career situations. In many jobs, it is a key way in which employees are assessed.

2. Note taking will help you become an active learner. Active learners take control of their own learning; they aren't overly reliant on the instructor. Also, test and assignment preparation requires you to budget time so that you will have enough time to do research and adequately analyze and synthesize all the material.

3. Good notes will help you figure out what is really important in a course and to organize the material to suit your style of learning. Without notes, you will likely attempt too much learning before exams in too short a time. Your notes will act as a guide map to the subject.

4. Notes will enrich your learning experience. Your instructor has likely constructed her notes using the very best sources that she was able to consult. Without notes, you miss the richness of the instructor's learning experience. Also, with notes, you can compare what you wrote with the material of your friends or study partners.

5. Notes will help you think critically. A major part of college or university training is the ability to evaluate or assess material as well as present it. You could know all about the techniques of investing in the bond or equities markets, but if you don't know what kinds of people would find bonds a preferred investment or when to time your purchases in relation to the interest rate, you won't be able to discuss that market very well, as would be required of a financial adviser.

6. Note taking is an excellent preparation for many careers. What would you think of a lawyer who listened to the facts of your case, but had to "wing it" in court because he hadn't taken any notes? How would you assess a financial advisor who didn't keep client files? Students who refuse to do any note taking are missing out on excellent practice in organizing complex and valued material.

Ten Strategies for Effective Note Taking

1. Follow the course outline for study objectives, and try to read as much text material as you can before every in-class presentation.

2. Choose a place in the classroom where you can see the instructor, the board, and any audio-visual materials presented.

3. Ensure that you have a separate filing system for each subject.

4. Note the course, date of presentation, specific topic, and page number at the top of each page.

5. Some instructors are very exact with respect to what they want to say on any subject, while others are very discursive, moving from topic to topic quickly and saying a lot that you may not consider relevant. In the latter situation, keep going back to what you think is the key topic or learning objective, and record only the most important material, avoiding their digressions.

6. When the instructor emphasizes material, put stars beside this material for extra study. This is particularly important for material that your instructor stresses may be on the exam.

7. Take notes when the instructor takes up exercise/problem material, and record short summaries of discussions.

8. Leave some space at the bottom of each page for your key summary, and allow yourself space in the margin at the left for key cues and terms.

9. Use abbreviations such as the upward arrow for "increasing," the downward arrow for "decreasing," the = sign for "equals," a rightward-pointing arrow for "resulting in," and leftward-pointing arrow for "as a result of."

10. Outlines such as those provided in a study guide or in the end-of-chapter material are helpful, but not nearly enough for understanding and test mastery. You could use them as a foundation, rounding out the material you want to learn in your own words.

PART FIVE How to Do Better On Economics Tests

There are four topics covered in this section: "Six Steps to Help You Prepare for a Test or Exam," "Seven Strategies for Writing Economics Tests Effectively," "Tips for Answering Different Types of Questions," and "Your Follow-up and Evaluation."

Six Steps to Help You Prepare for a Test or Exam

1. Ask the instructor about the format if she doesn't offer this to the class. Expect that some instructors will be helpful, but others won't. Questions to ask the instructor about are the types of questions, the approximate marks allocations to types of questions, and the basis of the test (whether it is more on text, or more on notes).

2. Try to figure out how closely the test will follow the learning objectives that have been established for the course. Normally they are available in the course outline.

3. Ask others how they are preparing. They may be willing to share some of their notes with you, or you can trade material to make up for gaps in your notes. You might also be able to get your classmate to share other materials she found interesting or useful with you.

4. Set a study schedule that fits your particular fatigue threshold. Some people get bored easily when they are studying and need blocks of time separated by breaks during which they watch TV, listen to music, exercise, or just "chill out."

5. Prepare your own pre-test; try test material from the study guide provided with your book, if the package is available. If it's not, ask the instructor to make arrangements with the publication's representative to get the study guide. Try the self-study exercises from the Web site for your book, which will be explained near the front. See if the instructor has made some arrangement with the computer lab for you to have access to a test bank for the course.

6. Exercise more than usual prior to a test; this will relax you, and make you more productive. When eating meals before an exam, eat in a very nutritionally balanced way, with lots of vegetables and fruit but little sugar.

Seven Strategies for Effectively Writing Economics Tests

1. When you open the test booklet, write down all the key information that you think is going to be helpful.

2. Read the whole test over before you start anything, noting the point allocations.

3. Read any directions carefully. Read each question carefully, noting what is being asked for. Some students start each question in an encyclopedic way, not really showing that they understood the question being posed. Begin wherever you are strongest; it is a confidence booster, which you might need.

4. Answer the questions you know best first, then come back to the ones that you are weaker on; your mind will be working on the weak spots as you proceed with your stronger responses.

5. Be sure to follow instructions on a machine-based test (e.g., use of pencil rather than pen) to the letter. This may have an effect on your grade.

6. After careful analysis, a question that looks new to you may resemble a question you did in class or studied. Try to compare new questions to what you already know.

7. Different kinds of questions require different kinds of skills. Use these different skills to excel no matter what type of questions you are required to answer. (See the next section for some tips.)

Tips for Answering Different Types of Questions

Multiple-Choice Questions: Make sure you read every word in objective-type questions. Watch out for qualifiers such as "always," "never," "all," "none," or "every." They may invalidate a potential answer that is otherwise correct. More general multiple choice answer options are often correct. Be careful around extreme statements.

Here are examples of economics multiple-choice questions:

1. Which of the following is considered a capital resource in economics?

A. A short-term corporate bond
B. A Microsoft common share
C. A computer with software loaded on it
D. A Government of Canada T-bill security
E. All of the above

The answer is "C," because the definition of a capital resource is "a thing (like equipment, plant, inventory) already produced that we can use to produce other goods and services." No other answer fits the definition.

2. Real GDP is

A. the value of all goods and services produced in an economy.
B. the value of all goods and services produced only in homes.
C. the value of factory-produced goods and services.
D. the value of all goods and services produced in an economy measured in the prices of a given year.
E. none of the above.

The answer is D. It is the proper definition, and it is also the most general of the alternatives.

True-or-False Questions: These test your knowledge of concepts and facts. If you don't know which choice is correct, the risks of guessing are better than in a multiple-choice question. Look again for qualifiers in questions, and read every word carefully.

Here are two examples of economics true-or-false questions:

1. True or False?
Economics deals only with positive statements.
False. It also deals with normative, values, statements.

2. True or False?
The real wage rate is the quantity of goods and services that an hour's work will buy in an economy.
True. That's the concept and the definition.

Essay Questions: The marker looks for writing skill, grammatical precision, and organizational ability. Watch for verbs such as "explain," "identify and explain," and "explain using graphs and diagrams"-they are the cue to what is really being asked.

Budget your time carefully-these questions can be real time-wasters! Also, watch your handwriting; your instructor has to be able to read your work.

Here's an example of a possible economics essay question:

Identify and explain the factors that cause a shift to the left, or a shift to the right, in the supply curve. What happens to equilibrium price and quantity in each situation? To answer this question, you will need to clearly identify and clarify each of the key factors: Technology or state of technology, the number of firms, costs of inputs, prices of related products, and expected future prices.

You should be specific with respect to certain terms such as technology. You could identify fibre-optic wire, for example, as allowing supply to be increased in the communications and Internet fields. In your discussion of related products, you will need to explain the concepts of substitute (a good which can be used in place of another, such as CDs for audio tapes), and complement (goods used together, such as wine and cheese, or french fries and salt).

Finally, illustrate by drawing a supply curve moving right in each situation, meaning that if demand does not change, a new, lower equilibrium price will be established and a new, higher equilibrium quantity of goods is reached. If the supply curve moves left and demand does not change, then equilibrium price will be higher; and a new, lower, equilibrium is reached for a good or service.

These kinds of questions are not easy; they require you to be able to organize your material well, present material using words and diagrams, and integrate material nicely for the reader. You can practise by trying to figure out what kinds of questions would likely be covered by such questions, and writing your suggested answers beforehand.

Your Follow-up and Evaluation

Tests are an opportunity to know what you have learned, or have failed to learn, so far in the course. If you have done well, give yourself a treat. If you haven't done so well, put some effective study skills, such as those outlined in this article, to work for you. If you are having difficulties, talk to the instructor about how to improve your work.

A somewhat typical human reaction to poor results is to get angry with the instructor or to blame yourself. Use positive strategies for improvement. Positive strategies include talking to the instructor with respect to his suggestions, trying to find new ways to learn the material (e.g., computer-based assisted learning), and changing your schedule to do more within your given time restraints. Try to understand where you went wrong, and rewrite the questions with the solutions that were required. These techniques will improve your performance.

PART SIX - Other Success Tips

Here are seven other success tips that should help you in your study of economics.

1. Take the time at the beginning of the course to understand graphs properly. Graphs are an important part of any economics course. They will help you understand two-dimensional and multi-dimensional social and economic phenomena, which need to be understood in order to do tests and exams properly. The text you are using likely has a section on understanding graphs, or your instructor may provide a section built into the course during the first few weeks. If your text or study guide provides some questions, try them, since you will gain confidence when you practise the exercise material. This Web site also provides you with a Graphing Primer; check it out.

2. Spend some time understanding the terminology. Like all disciplines, economics employs a language that you need to know. Review the end-of-chapter glossary for key terms and highlight in your notes key terms that the instructor explains.

3. Many economics exercises and problems are mathematics based. You are going to need to understand at least senior secondary algebra in order to do college or university economics, and some departments require a calculus background. If you have not taken these subjects, particularly if you are an adult learner or someone from another country, there are excellent software primers in algebra or calculus on the market. This Web site also has a section on Basic Algebra for Economics that will help you.

4. Find study partners. A study group will fulfill a number of functions for you. You may be strong on particular topics in a course, yet weak in others. A study partner may have complementary strengths and weaknesses to you, and you both benefit from working with each other. You may not make every class, and your partner(s) can help with missing notes. Remember, however, that effective trades benefit both parties! Studying will be more fun, and likely more effective as well as efficient if you study and practise the terminology and logical, sequential thinking out loud with others.

5. Old exams are valuable. Students who have taken the course before may have tests and exams that can be a great way for you to study and prepare for tests. Also, some resource centres or libraries keep copies of all exams; ask for them when studying. There is a section on this Web site where you can Download Past Exams for whichever Pearson economics textbook you are using. You should take advantage of this resource.

6. Study Guides can be very useful. Study guides to accompany the text are now available from many publishers. If you are taking the course in a lecture format, you especially need to explore the study guide to develop a hands-on or activist approach to the conceptual material. Knowing the application(s) will be just as important as knowing the concept. (Imagine a surgeon who had only studied how to take out your tonsils from a book.) Most study guides will include sections such as chapter perspective, learning objectives (these are very important!), chapter outline, key terms, key concepts, fill-in-the-blank questions, true-or-false questions, multiple-choice questions, matching questions, Working with graphs (these are also very important!), problems, applications to practical business, glossary, and solutions to the question material. My advice is to start with the learning objectives and keep your focus on them as you study.

7. Some newspapers, magazines, and books are valuable for acquiring a knowledge base in economics: The National Post provides in-depth coverage of economics issues, often with whole sections on such matters as fiscal policy, monetary policy, and free trade. The Globe and Mail also has excellent writers who do very thorough research. The Economist is a first-rate way to learn about economies throughout the world since it often has country- and continent-specific reports. If you are doing research on a particular economy outside of Canada, check out The Economist at your local library. If you are especially interested in public policy applications of economics, take a look at Policy Options or The Public Interest. And, if you still have some time to browse, many libraries have the following books which are classics in the field:

• Milton Friedman, Capitalism and Freedom (University of Chicago Press: 1963).
• Robert Heilbroner, The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers (Touchstone Books: 1999).
• Steve Landsburg, The Armchair Economist: Economics and Everyday Life (Free Press: 1995).

Finally, enjoy this subject with its fascinating store of knowledge and techniques. Have fun on the road you have chosen!

Notes

1. E.C. McKenzie, 14000 Quips and Quotes, New York: Wings, 1980, p. 147.

2. Michael Parkin and Robin Bade, Macroeconomics: Canada in the Global Economy, Toronto: Pearson Education Canada, 2000, pp. 2-5.

3. Roger L. Miller and Nancy Clegg, Economics Today: The Macro Perspective, Toronto: Addison Wesley Longman, 1999, p. 177.

4. Karl E. Case, et. al., Principles of Macroeconomics: First Canadian Edition, Scarborough: Prentice-Hall Canada, 1998, p. 308.

5. Case, Principles of Macroeconomics, pp. 112-3.