2005 Student Congress on Economic Issues

Minneapolis Public Schools—Learning Center for Economics
Federal Reserve Bank of Minneapolis

January 5, 2005

Participating High Schools

North, Edison, Roosevelt, South, Southwest and Washburn

2005 Results

(winning team from each topic):

Topic One
Team Two: Southwest/Roosevelt

Topic Two
Team Three: Southwest/Edison

Topic Three
Team Two: Southwest/Washburn

2005 Economic Congress Questions

Topic One

Hypothetically, let's say the Minnesota legislature has $50 million left to allocate for the general budget. Also, these funds are to be spent in an area or project that would strengthen the Minnesota economy. How can Minnesota best foster economic growth with this money?

TEAM ONE: Use incentives and tax policy to recruit businesses to the state. The state should use typical economic development tools, such as tax increment financing or subsidies, to lure companies to expand or move to Minnesota. In particular, these strategies could be used to bring businesses to regions facing economic stress. Other states use these strategies; if Minnesota doesn't, the state could lose jobs to other states. Examples of programs/proposals includes Minnesota's Job Opportunity Building Zones (JOBZ), new stadiums for the Vikings and Twins, and strategic deals with large employers.

TEAM TWO: The best way to boost the Minnesota economy is to invest in education. Economic research shows that economic growth and workforce quality go hand in hand. Investments in education lead to a more productive workforce, which not only attracts businesses to the state, but also leads to growth of new innovative companies. Examples of education investment include higher education, K-12 and early childhood development programs.

TEAM THREE: Companies base their location decisions on several factors, but a key factor is transportation infrastructure. Companies need effective roads/bridge systems to ship their goods by truck. commuters need efficient means to travel to work without having to wait in traffic. Therefore state expenditures in transportation are most immediate, including road and rail systems, mass transit, and airports.

Topic Two

What role, if any, should the United States play in addressing poverty in developing countries?

TEAM ONE: Forgive debt. Developing countries have amassed a significant amount of debt. For some countries, debt payments are a considerable percent of total public expenditure. The United States could forgive countries of debts to the U.S. government and negotiate debt relief with U.S. banks. This effort would likely ripple to other developed countries, encouraging other governments and banks to also forgive debts to developing countries. North/Roosevelt

TEAM TWO: Reduce trade barriers to foreign products and subsidies to U.S. companies that keep key products of developing countries from entering the United States. A key example is agricultural subsidies to U.S. farmers. While price supports for U.S. crops boost farm income domestically, they give U.S. farmers an advantage relative to producers in developing countries. Agriculture producers abroad miss the opportunity to sell in U.S. markets, greatly reducing their profitability. South/Washburn

TEAM THREE: Direct foreign aid. Support from the United States in the form of spending for education, roads, food and health care would allow developing countries to gain the necessary level of economic infrastructure to begin to accumulating wealth.

Topic Three

What should Jamal do? Jamal has decided to go to a four-year college after high school. Unfortunately, the school he wants to attend is expensive. After scholarships, grant money, help from his parents and money he has saved, Jamal still will need $4,000 per year to finance his education. The best thing for Jamal to do is:

TEAM ONE: Go to school by taking out a loan. The $16,000 he will need can be paid back after he graduates. The interest rate is 5.9% and he will have 10 years to repay. His monthly payment will be $177.00. North/South

TEAM TWO: Work for two years at a full-time job. He can save $8,000.00 per year living at home with his parents and then he could attend college without taking out a loan.

TEAM THREE: Work part-time while going to school part-time. Jamal figures he could graduate in seven years by using this method.

Note: Be sure to think about the opportunity costs that apply as you argue for your position or against another position.

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