1. Economics

2. Budgeting Essential Questions
Why is it important to have a balanced budget?
How does evaluation play a role in the budgeting process?
How does budgeting help consumers balance income, spending and savings goals?

3. Why Budgets Are Important
A budget will:
Give you a clear picture of your financial situation so you can live within your means.
Show you how much you can afford to spend—right down to the dollar—on everything from food ($200) to rent ($900) to a cocktail dress ($103).
Keep you motivated and accountable on your way to reaching your financial goals.

4. Budget
A budget is a plan for managing your money for a given period of time
A successful budget is
Carefully planned
Practical
Flexible
Written

5. What is Economics?
The study of how we make decisions in a world where resources are limited.
Science of decision-making

6. Wants v. Needs Needs – anything or any resource needed for survival
Examples include….
Wants – anything or any resource not necessary for survival that people would like to have
Examples include…..

7. Fundamental Economic Problem
Scarcity
Occurs when there are not enough resources to produce the products, goods, or services we would like to have
What types of products are scarce in the U.S.?

8. Scarcity = Alternatives
Scarcity of $$ leads the consumer to compare prices, making choices based on limited resources
What economic choices do societies face?

9. Limited Resources Unlimited Wants
Choices All societies face : basic economic questions

10. The basic questions What to produce??? How to produce???
For whom to produce???

11. Factors of Production
Resources necessary to produce goods and services
4 Major Factors of Production
Land
Labor
Capital
Entrepeneurship

12. Natural Resources Land Oil Rainfall Forests Mineral Deposits
2 types of natural resources
Renewable – a resource which increases in quantity over time (oxygen, timber, fresh water, solar energy)
Nonrenewable – can’t be reused, re-grown, or remade (coal, oil, natural gas)

13. Labor Labor force or human resources Can be both physical and mental
Varies in size over time
Affected by population growth, immigration, education, war, diease

14. Capital
Capital Goods – satisfy wanted indirectly by aiding in production.
Tools, machinery, and buildings used to make products

15. Consumer goods Goods which directly satisfy a want or wants
Ex: clothes, shoes, foods, clocks, bicycles, radios, etc…

16. Entrepreneurship
Individuals who start new businesses, introduce new products, and improve management techniques
Innovative, Risk-takers
Motive = profit

17. Decision Making Model 1) Define the Problem 2) List Alternatives
3) State the Criteria
4) Evaluate the Alternatives
5) Make a decision