2Pre-Learning Quiz What is capitalism? What is a “free-market economy”? How important is agriculture in Kentucky, and what do we mostly raise / grow?How important is manufacturing, and what do we in Kentucky produce / make?How has Kentucky’s economy changed over the years?
3Important Economic Terms Capitalism: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market Free Market Economy: an economic market or system in which prices are based on competition among private businesses and not controlled by a government Per Capita Income: income of each person Gross Product: the total value of the goods and services produced during a year, not including the value of income earned in foreign countries (Gross Domestic Product / Gross State Product)
4EconomicsPeople make choices about how to use limited resources, decide the ownership of resources, and structure markets for the distribution of goods and services.
5EconomicsWhat are the basic characteristics of free market, command, and mixed economies?
6Economics Characteristics of major economic systems Free market Private ownership of property/resourcesProfitCompetitionConsumer sovereigntyIndividual choice
7Economics Characteristics of major economic systems Command economy Central ownership of property/resourcesCentrally-planned economyLack of consumer choice
8Economics Characteristics of major economic systems Mixed economy Individuals and businesses as decision makers for the private sectorGovernment as decision maker for the public sectorA greater government role than in a free market economyMost common economic system today
9Economics The United States economy is a mixed economy . In the United States private individuals, businesses, and government share economic decision making
10EconomicsWhat are the essential characteristics of the United States economy?
11Economics Characteristics of the United States economy Free markets—Markets are allowed to operate without undue interference from the government.Private property— Individuals and businesses have the right to own personal property as well as the means of production without undue interference from the government
12Economics Characteristics of the United States economy Profit—Profit consists of earnings after all expenses have been paid.Competition—Rivalry between producers/sellers of a good or service results in better quality goods and services at a lower price.Consumer sovereignty— Consumers determine through purchases, what goods and services will be produced.
13You tube- BLUEGRASS AIRPORT Kentucky’s Economy: Current Trends and Future Realities(parts 1-2)
14Class ActivityWrite a paragraph describing the economic system of the United States, summarizing it as briefly – yet completely – as possible, including information about capitalism, free-market, profit, and competition.
15OverviewBetween statehood and the Civil War, Kentucky was one of the preeminent agricultural states, partly because of good access to river transportation down the Ohio and the Mississippi to southern markets. Coal mining had become an important part of the economy by the late 19th century.
16OverviewAlthough agriculture is still important in Kentucky, manufacturing has grown rapidly since World War II and was, by the mid-1980s, the most important sector of the economy as a source of both employment and personal income. Kentucky leads the nation in the production of bituminous coal and whiskey (distilling half of the nation's total in 1996), and ranks 2nd in tobacco output.
17OverviewEarly in its history Kentucky gained recognition for its excellent farming conditions. It was the site of the first commercial winery in the United States (started in present day Jessamine County in 1799) and due to the high calcium content of the soil in the Bluegrass region quickly became a major horse breeding (and later racing) area. Today Kentucky ranks 5th nationally in goat farming, 8th in beef cattle production, and 14th in corn production.
18OverviewToday Kentucky's economy has expanded to importance in non agricultural terms as well, especially in auto manufacturing, energy fuel production, and medical facilities. As of % of electricity produced in the USA depended on either enriched uranium rods coming from the Paducah Gaseous Diffusion Plant (the only domestic site of low grade uranium enrichment), or from the 107,336 tons of coal extracted from the state's two coal fields
19OverviewKentucky ranks 4th among U.S. states in the number of automobiles and trucks assembled. The Chevrolet Corvette, Cadillac XLR(2004–2009), Ford Escape, Ford Super Duty trucks, Ford Expedition, Lincoln Navigator, Toyota Camry, Toyota Avalon, Toyota Solara, and Toyota Venza are assembled in Kentucky. In May 2010, the Army Human Resource Center of Excellence, the largest office building in the state at nearly 900,000-square-feet, opened at Fort Knox, employing nearly 4,300 soldiers and civilians
20Kentucky BusinessThe best selling car in the United States, the Toyota Camry, is manufactured in Georgetown, Kentucky
21Kentucky BusinessThe best selling truck in the United States, the Ford F-Series, is manufactured in Louisville, Kentucky
22Top 10 Industries in KY (in millions of dollars) Motor Vehicles and Equipment $10,255Health Services $8,064Business Services $3,599Food and Kindred Products 2,718Electric, Gas, and Sanitary Services $2,551Transportation by Air $2,351Industrial Machinery and Equipment $2,274Chemicals and Allied Products $1,964Trucking and Warehousing$1,944Fabricated Metal Products $1,891Source: U.S. Census Bureau
23StatisticsThe total gross state product for 2010 was $163.3 billion, 28th in the nation. Its per- capita personal income was US$28,513, 43rd in the nation.As of July 2012, the state's unemployment rate is 8.3%.
24Class Activity KENTUCKY’S ECONOMY: SUMMARY Write a paragraph summarizing Kentucky’s economy, including products, manufacturing, and specific products grown or made in Kentucky.Also, answer these questions:What makes Kentucky’s economy STRONG?What could make our economy BETTER?What JOB do you see yourself doing in 10 years, and what do you have to do to prepare for it?
25TaxationThere are 6 income tax brackets, ranging from 2% to 6% of personal income. The sales tax rate in Kentucky is 6%. Kentucky has a broadly based classified property tax system. All classes of property, unless exempted by the Constitution, are taxed by the state, although at widely varying rates.
26TaxationReal property is assessed on 100% of the fair market value and property taxes are due by December 31. Once the primary source of state and local government revenue, property taxes now account for only about 6% of the Kentucky's annual General Fund revenues
27TaxationUntil January 1, 2006, Kentucky imposed a tax on intangible personal property held by a taxpayer on January 1 of each year. The Kentucky intangible tax was repealed under House Bill Intangible property consisted of any property or investment , such as bonds, notes, accounts receivable, trusts, enforceable contracts sale of real estate (land contracts), money in hand, money in safe deposit boxes, annuities, interests in estates, etc.
28Kentucky TaxesRev.ky.govFORMS, INFORMATION, ETC.
29Then & NowKentucky is an important center of manufacturing, agriculture, and mining. Until the 20th century, farming was the state’s main economic activity. As a result of abundant coal and hydroelectric power, manufacturing grew in importance after the 1930s. Today, manufacturing is Kentucky’s major economic activity, followed by service industries.
30AgricultureKentucky remains one of the nation’s major agricultural states. Tobacco is the leading source of crop income. Kentucky ranks second among the states, after North Carolina, in the production of tobacco. The state’s other major cash crops are corn, soybeans, and hay.
31AgricultureKentucky’s farmers also raise livestock—cattle and horses. The breeding and selling of thoroughbred horses is Kentucky’s most valuable source of livestock income. Most of the thoroughbred horses come from the bluegrass pastures that are located near Lexington.
32KY’s Top 10 Leading Crops Total (in millions) Hay $500.4 Tobacco $456.1Soybeans $405.2Corn $377.3Wheat $66.5Sorghum $7.5Apples $2.3Barley $1.1Peaches $1.0Source: National Agricultural Statistics Service
33KY’s Land usagePastureland 23% Cropland 21% Other Land 3% Federal Land 5% Developed Land 7% Forest Land 41%
34CoalKentucky is a leading coal-producing state. Coal is mined in Kentucky’s eastern Appalachian counties and in western Kentucky. About 60 percent of Kentucky’s coal comes from underground mines, the rest from surface mines. Coal-burning plants produce about 97 percent of Kentucky’s electric power. Hydroelectric utilities, such as Barkley and Kentucky dams, produce most of the rest.
37ManufacturingManufacturing and service industries are Kentucky’s most important economic activities. Most industries are located in Louisville, Lexington, and northern Kentucky. The production of transportation equipment, such as motor vehicles, is Kentucky’s leading manufacturing activity. Chemicals rank second among the state’s manufactured products.
38Service IndustriesMajor service industries are related to government, finance, health care, tourism, and wholesale and retail trade.
41Kentucky ExportsIn recent decades, Kentucky’s role in the global economy has steadily risen. In 2004, Kentucky’s exports totaled nearly $13 billion. About 18 percent of all manufacturing workers in Kentucky depend on exports for their jobs. Kentucky now ranks 19th among the 50 states and the District of Columbia in its amount of exports.
42Kentucky ExportsManufactured goods account for nearly 96.1% ($12.5 billion) of Kentucky’s exports. Agriculture accounts for 2.2% ($277 million), and minerals and ores account for less than 1% ($28.4 million.) Transportation equipment ranked as Kentucky’s top export in Other top exports were chemicals, machinery, and computer and electronic products. Livestock is the only non-manufacturing industry among Kentucky’s top ten exports. Livestock ranks as Kentucky’s tenth largest export ($244 million.) In 2004, Kentucky was first in the nation in livestock exports and first in the nation in equine (horse) exports ($157.2 million).
43Kentucky ExportsBy 2005, Kentucky was exporting globally to more than 165 foreign destinations. Canada is Kentucky’s largest foreign market. In 2004, Kentucky’s exports to Canada totaled almost $4.63 billion, which made up 35.7 percent of the state’s total exports. France is the state’s second largest export market. It received more than $1.08 billion of goods, or 8.3 percent of all Kentucky exports. Following Canada and France, Kentucky’s major export markets include the United Kingdom ($959 million), Japan ($865 million), and Mexico ($786 million).
44Gross Product & IncomeTwo key indicators of the strength of Kentucky’s economy are the gross state product and per capita personal income. The gross state product shows the values of the goods and services produced in Kentucky. The U.S. Department of Commerce reports that in 2004, Kentucky’s gross state product was about $135.4 billion. Per capita income shows the average income for each Kentucky resident. The U.S. Department of Commerce reports that in 2004, Kentucky’s per capita personal income was nearly $27,709.
46Category United States Kentucky Kentucky Rank Total Population (2004) 293,655,404 4,145,922 26th Average County Population (2004) 94,393 34,549 - Cost of Doing Business Index (2003) 100.0 85.0 4th Cost of Living Index (1st Quarter 2005) 93.0 16th Total State Taxes Paid (2004) $593 Billion $8.46 Billion 23rd Highest Per Capita State Taxes Paid (2004) $2,025 $2,041 21st Highest State and Local Tax Burden (2005) 10.1% 10.3% 33rd Highest Per Capita Personal Income (2004p) $32,937 $27,709 42nd Average Annual Wage and Salary (2003) $37,130 $31,169 34th Total Gross State Product (2004p) $11.6 Trillion $135.4 Billion
47 Per Capita Gross State Product (2004) $39,672 $32,661 42nd Poverty Rate (2003) 12.5% 14.4% 41st Annual Employment Rate (2004) 5.5% 5.3% 28th Total Exports in Billions (2004) $817.9 $13 19th Exports per Capita (2004) $2,785 $3,134 9th Percentage of Adults With a High School Education or Higher (2004) 85.0% 81.8% 44th Percentage of Adults With Four or More Years of College (2004) 25.0% 21.0% 48th
48Eastern Kentucky Economy In contrast to the generally prosperous Bluegrass area and the growing industrial cities, eastern Kentucky, highly dependent on coal mining, has long been one of the poorest regions in the US. Beginning in the early 1960s, both the state and federal governments undertook programs to combat poverty in Appalachian Kentucky.
49Greenup County Economy Economy Greenup, KY United States Unemployment Rate8.40% 8.60% Recent Job Growth-0.87% 0.35% Future Job Growth29.86% 32.10%Sales Taxes6.00% 5.00% Income Taxes5.80% 4.70% Income per Cap.$22,300$26,154 Household Income$42,299$50,935 (source:
50Greenup County IncomeESTIMATED HOUSEHOLDS BY HOUSEHOLD INCOMEIncome Less Than 15K16.05%12.37%Income between 15K and 25K13.96%10.53%Income between 25K and 35K12.84%10.88%Income between 35K and 50K14.68%15.37%Income between 50K and 75K20.11%20.14%Income between 75K and 100K10.52%12.41%Income between 100K and 150K8.34%11.27%Income between 150K and 250K2.66%5.01%Income between 250K and 500K0.77%1.86%Income greater than 500K0.08%0.16%
51Greenup County Occupations POPULATION BY OCCUPATIONManagement, Business, and Financial Operations7.82%14.04%Professional and Related Occupations18.18%20.61%Service14.58%14.45 %Sales and Office27.56%26.75%Farming, Fishing, and Forestry0.66%0.70%Construction, Extraction, and Maintenance13.15%9.42%Production, Transportation, and Material Moving18.05%14.05%