ECONOMICS Understanding Economics

Do Now – Copy Definitions from underlined words Economics is the social science that studies economic activity to gain an understanding of the processes that govern the: Scarcity is the fundamental economic problem of havingeconomic problem of having A market economy is an economy in which decisions regarding investment, production and distribution are based oneconomy in which decisions regarding investment, production and distribution are based on Business cycle: The fluctuations in economic activity that an economy experiences over a period of time.

What is Economics Economics is the social science that studies economic activity to gain an understanding of the processes that govern the: Production Distribution consumption of goods consumption of goods services in an economy. Economics deals primarily with the concept of: – Scarcity What is scarcity? Scarcity is the fundamental economic problem of havingeconomic problem of having – unlimited human wants in a world of limited resources. unlimited human wants in a world of limited resources.

Explain the picture in your own words

Market Economy What is a market economy? A market economy is an economy in which decisions regarding investment, production and distribution are based oneconomy in which decisions regarding investment, production and distribution are based on Supply demand Main purpose of a market economy would be: – Encourage political and economic cooperation between member nations

Market Economy

Market economies are guided by the idea that they are: – Governed by self interest – Set prices If more people want a product – the price goes up and companies make less If less people want a product – the price goes down and companies make more

Deficit Spending What is deficit spending? – The act in which the federal government spends more than it receives – Deficit spending is normal in times of economic slowdowns Job: – Pumps money into the economy to: Stimulate activity and job growth

Deficit Spending Purchasing power will increase and economic growth will be stimulated The overall amount of money that the U.S. owes to its creditors is Deficit spending

Deficit Spending Some issues that Governments face with deficit: – Hard to reduce the size of a deficit – The larger the budget deficit – the greater the national debt – Deficit occurs when the government spends more than it receives

Economic Depression What are the causes of Economic Depression? – High unemployment – overproduction

Business Cycle Business cycle: – The fluctuations in economic activity that an economy experiences over a period of time. – A business cycle is basically defined in terms of periods of expansion or recession.

Business Cycle Business cycles purpose are for governments to look at: – Irregular fluctuations in economic activity

Government Spending People disagree with the laws of deficit spending – Do you support /not support the idea of government intervention to help stimulate the economy?

Activity Work with a partner to track the nations deficit and debt over a period of 10 years Write a brief explanation on your findings Draw a detailed graph or chart of the information you found