1. Unit 1: What is economics all ABOUT? Chapters 1-6

2. Chapter 1: Making choices Personal Economics What are good services? Two of the most important words in economics are GOODS and SERVICES Two of the most important words in economics are GOODS and SERVICES GOODS -Things that can be seen or touched EX: sneakers or advertisements. GOODS -Things that can be seen or touched EX: sneakers or advertisements. SERVICES – Are useful things that cannot be seen or touched EX: Salesperson who rents or sells you a dvd is performing a service SERVICES – Are useful things that cannot be seen or touched EX: Salesperson who rents or sells you a dvd is performing a service

3. What are economic resources? Economic resources are things that go into the making of good and services. Economic resources are things that go into the making of good and services. There are 3 kinds There are 3 kinds Natural resources – Things provided by the world. (EX: FOOD, AIR, WATER) Without natural resources there wouldn’t be any goods. Natural resources – Things provided by the world. (EX: FOOD, AIR, WATER) Without natural resources there wouldn’t be any goods. Human resources – Are the individuals which put everything together to make goods and services EX: when you go to the doctors office everything is done in a timely matter. Human resources – Are the individuals which put everything together to make goods and services EX: when you go to the doctors office everything is done in a timely matter. Capital resources – The machines, tools and buildings used in a production of goods and services. (more goods then services) EX: Trucks, Trains carry goods across the country. Capital resources – The machines, tools and buildings used in a production of goods and services. (more goods then services) EX: Trucks, Trains carry goods across the country.

4. Economic choices Economics is all about the decisions that we make as an producer and consumer. Which brings us to scarcity. Scarcity – Means that there isn’t enough of everything, there’s a limit to everything Scarcity – Means that there isn’t enough of everything, there’s a limit to everything Macroeconomic – Is the study of the effects of changes on the economy as a whole. Macroeconomic – Is the study of the effects of changes on the economy as a whole. Microeconomic – Is the study of the effects of decisions by individuals and firms on various parts of the economy Microeconomic – Is the study of the effects of decisions by individuals and firms on various parts of the economy

5. Chapter 2: Types of economic system Economic system – Describes how a nation is organized for production. Traditional Economic system – Its based on custom and tradition, also provides less of a demand on the resources of earth because goods are only produced if they will be consumed. Traditional Economic system – Its based on custom and tradition, also provides less of a demand on the resources of earth because goods are only produced if they will be consumed. Market Economic system: One in which nations economy decisions are the result in individual decisions by buyers and sellers in the market place; Market system are also known as Free enterprise system Market Economic system: One in which nations economy decisions are the result in individual decisions by buyers and sellers in the market place; Market system are also known as Free enterprise system

6. Command Economic system The what, how, and who question s are mainly decided by some central authority. The mean of production are owned mostly by the government. The command system has been a failure. The command system has been a failure.

7. Chapter 3: The U.S. Free enterprise system How does the U.S. free enterprise system operates? It operates according to the six principles It operates according to the six principles Freedom to choose employment – You will decide what fees to charge and what hours to work. Also you must keep accurate financial records and pay taxes; employment is basically your alone to make Freedom to choose employment – You will decide what fees to charge and what hours to work. Also you must keep accurate financial records and pay taxes; employment is basically your alone to make Right to property – is a piece of land building, vehicle or other things owned by an individual, a family or a group. Right to property – is a piece of land building, vehicle or other things owned by an individual, a family or a group. Profit motives – The amount of money left over after subtracting your business expenses from your business income known as your profit. Profit motives – The amount of money left over after subtracting your business expenses from your business income known as your profit.

8. Competition – The rivalry between the sellers in the same field for consumers’ dollars. Competition – The rivalry between the sellers in the same field for consumers’ dollars. Consumer sovereignty – Consumers are said to have the power or freedom to have final say. Consumer sovereignty – Consumers are said to have the power or freedom to have final say. Rule of Law – Our economic system work because it operates within the framework of a government of laws, not individuals. No one is above the law. Rule of Law – Our economic system work because it operates within the framework of a government of laws, not individuals. No one is above the law.

9. Chapter 5: Money and Banks What is money? – Money is anything that most people are willing to accept in payment for goods and services. What is money? – Money is anything that most people are willing to accept in payment for goods and services. What does money do? – Money promotes trade, Also people can easily trade goods and services with one another. What does money do? – Money promotes trade, Also people can easily trade goods and services with one another. Medium of Exchange – Money provides a way to calculate value also a method of saving. Medium of Exchange – Money provides a way to calculate value also a method of saving. Checks – Is a written order directing a bank to pay a specified sum from one person’s account to another person or a business. Checks – Is a written order directing a bank to pay a specified sum from one person’s account to another person or a business. Business of banking – Helps people deposit and withdraw money from their accounts with them also allows people to borrow money to start businesses, buy home, buy motor vehicles Ect. Business of banking – Helps people deposit and withdraw money from their accounts with them also allows people to borrow money to start businesses, buy home, buy motor vehicles Ect.

10. Chapter 6: The value of money might increase or decrease What is Inflation – Is a rise in the prices of most goods and services. When that happens people cant buy as much goods as the year before What is Inflation – Is a rise in the prices of most goods and services. When that happens people cant buy as much goods as the year before Deflation – Is the opposite, which rarely happen this means that the value of the dollar went up. Deflation – Is the opposite, which rarely happen this means that the value of the dollar went up. Who does it effect? Retired people that live off dependents such as social security, private pensions, bonds. Retired people that live off dependents such as social security, private pensions, bonds. People with savings that put all of their extra cash into savings, b/c of inflation their money maybe worth less then what it originally was. People with savings that put all of their extra cash into savings, b/c of inflation their money maybe worth less then what it originally was. People who have low income b/c of inflation it would be harder on them b/c they have little to enough money to spend. People who have low income b/c of inflation it would be harder on them b/c they have little to enough money to spend. Who does it benefits? People who owe money because of the loans that were taken out can now be repaid with the dollar b/c it becomes worth less after inflation, in the long run their saving a lot of money. People who owe money because of the loans that were taken out can now be repaid with the dollar b/c it becomes worth less after inflation, in the long run their saving a lot of money. People who own real estate because of the inflation, their value of the homes or property’s the were purchased will increase EX: the home was 75,000 in 1990 now b/c of inflation in 2009 it’s now worth 400,000. People who own real estate because of the inflation, their value of the homes or property’s the were purchased will increase EX: the home was 75,000 in 1990 now b/c of inflation in 2009 it’s now worth 400,000. What causes inflation? ---rising demand or increasing cost.

11. Chapter 4: DEMAND AND SUPPLY!!!!!!!! What are the law of demand and supply? What are the law of demand and supply? What is the market price? What is the market price? How do changes in the demand for or supply of a product AFFECT its price? How do changes in the demand for or supply of a product AFFECT its price? Why are prices important in a market economy? Why are prices important in a market economy?

12. What are the law of demand and supply? Demand – Is the amount of the item that the buyers are willing and able to purchase at any and all prices. Demand – Is the amount of the item that the buyers are willing and able to purchase at any and all prices. Supply – Is the quantity of a good or service that is offered for sale at all prices this will increase revenue. Supply – Is the quantity of a good or service that is offered for sale at all prices this will increase revenue.

13. Market Price – Is the price at which supply and demand are equal. The market price will always remain the unchanged as long as supply and demand remain unchanged. If there is an increase in demand or a decrease on supply, the market price will increase. Because the more people want the product the more money the producer makes. Market Price – Is the price at which supply and demand are equal. The market price will always remain the unchanged as long as supply and demand remain unchanged. If there is an increase in demand or a decrease on supply, the market price will increase. Because the more people want the product the more money the producer makes. Changes in demand – Change in demand also affects the prices which goods will be bought and sold. If the demand for an item has increased, the prices at which it will be sold at will also increase. And if the demand decreases the price will also decrease. Ex: On mothers the demand for flowers is very high, so the price increases. On a regular day the demand for flower isn’t high so the price decreases. Changes in demand – Change in demand also affects the prices which goods will be bought and sold. If the demand for an item has increased, the prices at which it will be sold at will also increase. And if the demand decreases the price will also decrease. Ex: On mothers the demand for flowers is very high, so the price increases. On a regular day the demand for flower isn’t high so the price decreases.

14. Change in supply – If the number of the items available for sale at a particular price the supply increases, the price will fall. But if the supply of items decreases, the price will rise. EX: If there is a new brand that makes the production of sneaker a lot cheaper, there will be an increase in the output of the sneakers. With more outputs in the market, the price of sneakers will likely fall, creating greater demand in the marketplace. Change in supply – If the number of the items available for sale at a particular price the supply increases, the price will fall. But if the supply of items decreases, the price will rise. EX: If there is a new brand that makes the production of sneaker a lot cheaper, there will be an increase in the output of the sneakers. With more outputs in the market, the price of sneakers will likely fall, creating greater demand in the marketplace. Why are prices important in a market economy? – The key ingredients is to make things happen. If the buyer wants to own something badly enough, they would be willing to pay more. And when seller wants to sell an items badly enough, they would be willing to lower to prices. Why are prices important in a market economy? – The key ingredients is to make things happen. If the buyer wants to own something badly enough, they would be willing to pay more. And when seller wants to sell an items badly enough, they would be willing to lower to prices.

15. 1. Act a Signals to buyers and sellers When prices are low enough, they send a “buy” signal to buyers. When prices are high enough it sends a “sell” signal to the sellers, who can earn a profit. When prices are low enough, they send a “buy” signal to buyers. When prices are high enough it sends a “sell” signal to the sellers, who can earn a profit. 1. Encourage efficient production The less the it cost to produce an item, the more likely that it’s producer will make a profit. The less the it cost to produce an item, the more likely that it’s producer will make a profit. Producers Strive for efficiency as a way of increasing their profits. Producers Strive for efficiency as a way of increasing their profits.