Learn about money in money land:
http://www.orangekids.com/cedric/money_intro.htm

Learn about spending pattern in spendopolis:
http://www.orangekids.com/cedric/spend_sp_001.htm

Learn about saving:
http://www.orangekids.com/cedric/save_intro.htm

Learn about investment in investment republic:
http://www.orangekids.com/cedric/invest_intro.htm

In the following activity, you'll start with $100 in Part 1 and $1000 in Part 2 and attempt to accumulate as much wealth as you can by either investing your money in the stock market or setting it aside safely in the bank. When investing in the stock market, your money will be spread among all the stocks in the market rather than placed in any single stock. This is much like investing in a diversified mutual fund. For those who aren't sure what a diversified mutual fund is, it is simply a fund that pools money from many different investors and invests in a basket of stocks. A single individual often does not have enough money to do this on his or her own. Now click below and begin your quest for guru status.

Part 1
Part 2

Professional investment managers have a variety of statistics they examine in an effort to estimate the relative value of the stock market. To help you with your decision-making process, the main ones they use will be given during your trek through time. Read the following summaries of three key statistics to give you an idea of what information they contain. Keep in mind however, if markets are truly efficient, these ratios may be of little help. Perhaps you will find the relationship that others have not.

1. Price/Earnings (P/E) ratio: This ratio describes how much one is paying for every dollar a company earns. For example, if a company's stock price is $15 per share, and it earned $1 per share over the preceding year, its P/E ratio would be 15. To give you some historical perspective, the average P/E ratio over the last 80 years has been 15.7. As of 4/15/2002 the average P/E for the largest 500 stocks was 25. All else equal, the lower the P/E ratio, the less expensive stock prices are.
2. Dividend Yield: Many stocks pay dividends. Dividends are payments to shareholders from the company's earnings. The dividend yield is the dividend divided by the share price. As an example, suppose you buy stock at $10 a share and the company pays $1 per share in dividends. In this case, the dividend yield would be $1/$10 = 10 percent. For historical perspective, consider that the average dividend yield over the last 80 years has been 4.39 percent. At the end of the year 2001, it was 1.5 percent . All else equal, the higher the dividend yield, the more attractive stocks are.
3. Interest Rate: The one-year interest rate tells you how much you can expect to earn on bonds over the next year. Bonds are fixed-income instruments that guarantee a fixed return. Think of them as savings bonds that you may have. The higher the interest rate, the more bonds pay and the less attractive stocks will be. Thus, as interest rates rise, stock prices generally fall as investors move money out of stocks and into bonds. Conversely, as interest rates decline, investors move wealth from bonds and into stocks.

For the P/E ratio and dividend yield, the preceding five-year average will be given. This will give you a historical context in which to judge these two statistics so that you can at least make an educated guess as to whether the statistics are relatively high or low.
The question you have to answer is whether the statistical value will revert back to its average or keep on trending in one particular direction. For example, if the P/E ratio is above its five-year average, common wisdom would suggest stock prices are relatively high. This may portend that stock prices will soon fall. On the other hand, if P/E ratios have moved above their average, this may suggest P/E ratios are trending upwards and thus stock prices will rise. If all this sounds somewhat contradictory and confusing, it is. Forecasting stock prices is often considered more of an art than a science.

Extracted from http://www.econedlink.org

Singapore and Brunei launch new $20 notes

extracted from Channel News Asia 27 June 2007

A new $20 polymer note has been launched to celebrate the 40th anniversary of the Currency Interchangeability Agreement between Singapore and Brunei. The commemorative notes were launched by Singapore Prime Minister Lee Hsien Loong and the Brunei Sultan Hassanal Bolkiah at a ceremony in Bandar Seri Begawan on Wednesday. Three million of the Singapore $20 commemorative notes will be introduced into circulation gradually through the banks, starting 16 July.

I hope that this article will interest you. You can find out more from the Singapore Mint website at http://www.singaporemint.com/. Please revise on the following this week as we look into the topic on money:

What is money? What are the functions of money? Why is it used as a medium of exchange? What are the forms (types) of money? Why is money introduced as a medium of exchange over barter trade( cons of barter trade)? What are the differences between the Central Bank and the commercial banks?

Write on the following topics:

1. Are Credit Cards A Form Of Money?

you can refer to this link for a comment on the above topic: http://economics.about.com/cs/money/a/credit_cards.htm

2. What are the differences in the functions of the Central Bank and the commercial Banks in Singapore?

you can refer to this link to learn more about the functions of the Central Bank in Singapore: http://www.mas.gov.sg/resource/eco_research/eco_education/explorer/explorer1.pdf

about commercial banks in Singapore:

http://www.abs.org.sg/members.htm

Try out the quiz on money here: http://www.bized.co.uk/virtual/bank/economics/money/quiz.htm

Saw this poster at the MRT station - can you recall what is inflation and the consequences?

Remember about the essay competition for budget 2007? Click on the link below to read the winning entries:
http://www.mof.gov.sg/budget_2007/essay_winners.html#cat1a

Saw this on the internet and found it quite interesting. Questions and answers on economics.
Click on the link below:
http://www.studyzones.com/ActivityZone/answers.cfm?subject=Economics

Try out this game on why do countries trade.
http://nobelprize.org/educational_games/economics/trade/

Read up on why some countries are restricting trade (protectionism) and why some economists are against protectionism.

Try out the following exercise, assumming different roles in arguments to increase or reduce tariffsfor the Car industry in Malaysia:
http://geocities.com/olevelecons/tradeorprotect.doc

The ASEAN Trade agreement call for Malaysia to reduce tariffs in its car industry.
Provide the arguments for and against the reduction of tariffs for the car industry in Malaysia.

Check out the HDI for the different countries :
http://hdr.undp.org/hdr2006/statistics/

Select a country below to see how its HDI relates to its GDP and how it compares to another country.
http://hdr.undp.org/hdr2006/statistics/flash/statistics_hdi.cfm

Listen to all these audio recordings from Bized:

The Economic Problem [2MB]
Opportunity Cost [2MB]
Public and Private Sectors: Part 1 [3MB]
Public and Private Sectors: Part 2 [2.5MB]
Economic Systems - Introduction [1.2MB]
Economic Systems - Command, or Planned, Economy [2.8MB]
Economic Systems - Market Economy [3.3MB]
Economic Systems - Mixed Economy [483KB]
Location of Industry 1 [1.2MB]
Location of Industry 2 [1.2MB]
Location of Industry 3 [1.2MB]

Podcast is getting quite popular nowadays - what do you think of this from Bized? The recordings are in MP3 format and many polytechnics and even JCs are trying this out as many students own a MP3 player nowadays. Would you like to receive the podcast on the topics that you are studying? Would you want to be involved in the production of a podcast?

Try this simple exercise on demand and supply - I like the fact that it shows you how the demand and supply curve shift on the right hand side.
http://ecedweb.unomaha.edu/Dem_Sup/econqui2.htm

Something for you to think about:

Tax all equally, but... February 07, 2007

Why it works: The extra GST revenue, amounting to $1.5 billion annually, will be used to fund areas like education, health care and transportation. It will also enable the Government to cut corporate taxes to draw more investors.
The Government has promised a 'comprehensive offset package' to help the needy.

Why it may not work: The GST is a regressive tax. While the rich may not feel the pinch of the hike, every dollar counts for the needy. The higher cost of living will hit the poor harder. GST will always be with us but the offsets might not last, argue critics.

Source: http://newpaper.asia1.com.sg/news/story/0,4136,122804,00.html?

Points to think about:

1. Reasons for the increase in GST.

2. How does it help the government to achieve its aims?

3. What is a regressive tax?

4. Why would be people worried about the increment in GST?

5. Do you think the incidence of tax will be more on the producers or the consumers?

6. What are the safety measures which the government can adapt to cushion the adverse impact of the increment in GST?

Hong Kong enjoys low rates of both personal and corporate taxation. Concerned at the territory's narrow tax base and the government's over-dependence on tax revenue from property transactions, the government is consulting the public on the proposed introduction of a Goods and Services Tax (GST). Initial popular reaction has been largely unfavourable, primarily because of concerns that it will impose an undue burden on the poorer members of society, and may also harm Hong Kong's attractiveness as a tourist destination.

source: Extract from http://en.wikipedia.org/wiki/Hong_Kong

*In a surprising about turn, the Hong Kong government announced on 5 Dec 2006 that it will abandon plans for a goods and services tax in the face of widespread public hostility to the idea.

1. Name the four types of taxes mentioned in the above source and classify them under direct or indirect tax.

2. What are the demerits of the Goods and Services tax as mentioned in the passage?

3. What other demerits do the Goods and Services tax have other than those mentioned in the extract?

4. Why do you think the Hong Kong Government wanted to introduce the goods and services tax?

Though the deadline for the essay writing competition based on the above theme is over, I would like you to comment on the following:

1. What do you think are the key challenges facing Singapore in the foreseeable future (e.g. social, economic, security)? What kinds of spending needs arise from this?

2. With no natural resources and limited revenue sources, how would you prioritise these spending needs? What can we spend less on in order to meet these increased spending needs?

3. How should Singapore find the revenue to fund our future spending needs (e.g. raising taxes – if so, what type)? Are there other alternative sources of revenue you think should be explored? What are the implications of funding our expenditure through such means?

Try out this game on budget 2007 - If you were the finance minister:
http://app.mof.gov.sg/budget_2007/choice/index.asp

In the game you are to:
1. Tell us how much you would allocate for each aspect of our public expenditure.
2. Decide how you would raise the revenue to finance these expenditure items.

All countries face tough choices in fiscal policy. Like most choices in life, fiscal choices have their own set of tradeoffs, i.e. costs and benefits. Higher taxes lower household incomes but allow the Government to provide more for the less privileged. Lower taxes increase our business competitiveness but may undermine the Government’s ability to provide adequately for its citizens. Each choice taken also impacts current and future generations differently. Are our taxes too high? Where can we look to for more revenue to meet budgetary shortfalls?
There are no perfect choices. Each country decides based on its own circumstances, beliefs and values.

I hope that you will understand the role of the government much better after playing the game.Please add to comment after you have tried the game.

Let's discuss the latest economic issues here! Participate actively in commenting the issues which I will be posting here.