Textbook reference Unit 6 (Ch. 17 – 21) Economics Goals 7 - 9 Textbook reference Unit 6 (Ch. 17 – 21)

7.01 Describe the factors of production and their impact on economic activity Economics stems from satisfying peoples needs and wants The basic economic questions What to make? How much to make? How to make it? Who gets what is produced? The answers help us decide how to use the factors of production

Factors of production Examples?

7.02 Explain how scarcity influences producers & consumers to make choices 7.03 Examples of tradeoffs & opportunity costs Satisfaction Limited resources Tradeoffs Opportunity costs

7.04 Explain the impact of specialization, division of labor, & consumption and production increases We are not self sufficient. We specialize in our economic activities We break down activities into smaller parts – Division of labor Result: we are more productive & it create a need for markets Invention, innovation, & new technology usually increase productivity What is the effect of these on price?

7.05 The impact of investment Increased labor productivity Increased output Increased wages Increased demand

7.06 Compare and contrast different economic systems Traditional Driven by custom, centered on the family unit Slow to adapt Command Government owns & controls the factors of production Quota driven Market Private ownership. Individuals own the factors of production Driven by self interest

8.02 How the free market system encourages private ownership and promotes initiative The right to own property is one of the most important individual rights Protected by the 5th and 14th Amendments Our market system depends on individual decisions and actions Private ownership and seeking profit leads to production of goods, services, wealth, & investment

8.02 (cont) Governments role in a free market economy: Maintain the health of the economy Patents and copyrights Ensure competition Antitrust laws

8.03 Explain the circular flow of economic activity Factors of Production Income Businesses Households Consumer Spending Goods and Services

8.04 Illustrate how supply and demand affect prices Law of Demand - As the price of goods and services fall, the quantity demanded will rise. Law of Supply - As the price of goods and services rise, the quantity supplied will rise. Market Price - That price at which the quantity demanded is exactly equal to the quantity supplied. Also called equilibrium price.

8.05 Predict how prices change with shortages or surpluses Price Quantity Demanded Supplied 5.00 10 60 4.00 15 50 3.00 25 40 2.00 40 30 1.00 55 10

8.06 Explain how changes in competition can affect price and output Number of Firms Variety of Goods Control of Prices Barriers to Entry Perfect Competition Many None Monopolistic Some Little Low Oligopoly A Few High Monopoly One Complete

8.07 Describe the roles & functions of economic institutions and business organizations

8.08 Evaluate the investment decisions made by individuals, business, & govt.

8.09 Describe the role of money in trading, borrowing, & the government What is it? Anything that serves as a medium of exchange, a unit of account, and a store of value. Six characteristics: 1. Durable 2. Portable 3. Divisible 4. Uniform 5. Limited supply 6. Acceptable Why is it valuable?

Banking Safely hold peoples money, pay them interest, and loan money to others at a higher rate of interest Banks are the “fuel” that run the economy. They make money available for investment to help the economy grow Started with goldsmiths in the middle ages

Banking services Storing money Saving money Loans FDIC Safe deposit box Saving money 1. Checking account 2. Savings account 3. Money Market fund 4. Certificate of Deposit Loans Fractional Reserve banking Credit cards (Debit cards) ATM

9.01 Identify phases of the business cycle & economic indicators used to measure

Predicting the business cycle Leading indicators (change coming) They come before major changes in the cycle Building permits Coincident indicators (change here) How the economy is doing at the present time Rise in income Lagging indicators (how long will it last) Signs that follow major changes in the cycle New business applications

9.02 The impact of government regulation on economic activity Protecting consumers and workers FDA, OSHA, CPSC, FDIC Promoting competition FTC Supervising labor-management relations NLRB Protecting the environment EPA Ensuring Economic Stability Fiscal Policy Monetary Policy

9. 03 The impact of the movement of human & capital resources on the U 9.03 The impact of the movement of human & capital resources on the U.S. economy Decline of manufacturing Loss of jobs Need to retrain for new jobs Shift overseas where labor is cheaper Population shifts Rust Belt to Sun Belt Increased immigration

9.04 The impact of current events on decisions of consumers, producers, & government New technological advances MP3, Blueray, microtechnology War on terrorism Mobilization of the military Homeland Security Department Subprime home loans Collapse of mortgage industry Federal government bailout of financial industry

9. 05 The impact of international trade & global products 9 9.05 The impact of international trade & global products 9.06 How are domestic & international economies interdependent The world is flat We are increasingly interdependent with other countries We spend more on imports than we make on exports (trade deficit) Equals about 25% of our GDP Free trade The United Nations WTO NAFTA Helping developing countries (foreign aid)

9.07 The effects of Fiscal & Monetary policy on the economy Fiscal Policy The use of government spending and revenue collection (taxes) to influence the economy Conducted by Congress Monetary Policy Actions the Federal Reserve System (the Fed) takes to regulate the money supply Conducted by the Federal Reserve Board

Monetary policy

Fiscal policy

9.08 The influence of environmental factors, economic conditions, & policy decisions on individual economic activities

Visual summary . . . . . . . Economics P. 470 Mkt. principles P. 512 Types of banks P. 515 Money supply P. 525 Social security P. 528 Spend & save P. E28 Economic glossary P. 540 Bus. Cycle P. 550 Econ. Challenges P. 557 Supply & demand P. 559 Circular flow P. 571 Global economy