What is Economics?

Economics is…. the study of how people make decisions in a world where resources are limited. it is also the study of how things are made, bought, sold and used.

2 Types of Economics Microeconomics: “the small picture”. (“micro” = small) decision making of individuals and individual businesses.

2 Types of Economics Macroeconomics: “the big picture”. (“macro” = big) decision making by large units such as governments or whole industries.

Let’s practice… Mr. and Mrs. Smith purchase a new T.V. Microeconomics or Macroeconomics? Microeconomics!

Let’s practice… The Federal Reserve cuts interest rates on loans. Microeconomics or Macroeconmics? Macroeconomics!

Let’s practice… Best Buy slashes prices on all T.V.’s 48” and bigger. Microeconomics or Macroeconomics? Microeconomics!

Let’s practice… The airline industry asks the government for financial help. Microeconomics or Macroeconomics? Macroeconomics!

What is an economic model? An economic model is a theory that tries to explain human economic behavior.

Economic Systems… The way a country produces the things its people want and need is called an economic system. A country’s economic system determines how basic economic decisions will be made.

Any idea what the United States economic system is called? The United States economic system is called: Free Enterprise Capitalism

2 Major Economic Groups Producers: the individuals or groups that make or provide goods and services. Consumers: the individuals or groups that purchase and make use of the goods and services that are produced.

In this unit we will explore… In this unit we will explore: Needs vs. Wants Scarcity Economic Decision Making Factors of Production Circular Flow of Economic Activity Factors that Promote Economic Growth Capitalism: History and Features