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Introduction: Economic Issues

Introduction: Economic Issues. Burlington Central High School Mr. LaPlante Grade 12 University Credit. Economics. Unit 1 Chapters 1-3 The Nature of Economics and the Economy. Economics and Key Skills. Note taking News Issues & Analysis Debate Research Organisation

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Introduction: Economic Issues

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  1. Introduction: Economic Issues

  2. Burlington Central High School Mr. LaPlante Grade 12 University Credit Economics Unit 1 Chapters 1-3 The Nature of Economics and the Economy

  3. Economics and Key Skills • Note taking • News Issues & Analysis • Debate • Research • Organisation • Interpreting graphs and statistics

  4. Basic principles of economics “Social Science of Scarcity and Choice”

  5. Economics defined Greek origins Oikos - “house” Nemo “to manage” Wise management of one’s house “The study of the way we make decisions about the use of scarce resources” Why? Because our needs and wants are insatiable and our resources are finite

  6. Human Behaviour • Rational and social beings therefore we are able to predict the groups behaviour but not always the individuals that make up the group. • Knowledge of the group behaviour can be useful for decision makers.

  7. As a student are you?... Effective? Using resources to achieve the desired results Efficient? Using the bare minimum of resources to achieve the desired result Economic decisions need to be both effective and efficient

  8. Efficiency means we have to realise we give up something else to achieve our goals Opportunity costs- the sum of all that is lost from taking one course of action over another.(maximum potential loss)

  9. The Economic Problem • Economic problems • production and consumption • Scarcity: the central economic problem • Macroeconomic ideas • growth • unemployment • inflation • balance of payments problems • cyclical fluctuations

  10. The Economic Problem • Microeconomic issues • choices: • what • how • for whom • the concept of opportunity cost • rational decision making

  11. What are the four categories of Resources? Land Labor Capital Entrpreneurship

  12. What is aLand Resource? A shorthand expression for any natural resource provided by nature

  13. What is Labor? The mental and physical capacity of workers to produce goods and services

  14. What is Capital? The physical plants, machinery, and equipment used to produce other goods

  15. What isFinancial Capital? The money used to purchase capital

  16. What is Entrepreneurship? The creative ability of individuals to seek profits by combining resources to produce innovative products

  17. Labor Land Capital Entrepreneurship organizes resources to produce goods and services

  18. What isCeteris Paribus? A Latin phrase that means that while certain variables can change, “all other things remain unchanged”

  19. What isPositive Economics? An analysis limited to statements that are verifiable

  20. What isNormative Economics? An analysis based on value judgement

  21. Society Chooses Resources Scarcity Unlimited wants

  22. The Economic Problem • The production possibility curve • what the curve shows

  23. Units of food Units of clothing (millions) (millions) 8m 0.0 7m 2.2m 6m 4.0m 5m 5.0m 4m 5.6m 3m 6.0m 2m 6.4m 1m 6.7m 0 7.0m A production possibility curve Units of food (millions) Units of clothing (millions)

  24. A production possibility curve a Units of food Units of clothing (millions) (millions) a 8m 0.0 7m 2.2m 6m 4.0m 5m 5.0m 4m 5.6m 3m 6.0m 2m 6.4m 1m 6.7m 0 7.0m Units of food (millions) Units of clothing (millions)

  25. A production possibility curve b Units of food Units of clothing (millions) (millions) 8m 0.0 b 7m 2.2m 6m 4.0m 5m 5.0m 4m 5.6m 3m 6.0m 2m 6.4m 1m 6.7m 0 7.0m Units of food (millions) Units of clothing (millions)

  26. A production possibility curve c Units of food Units of clothing (millions) (millions) 8m 0.0 7m 2.2m c 6m 4.0m 5m 5.0m 4m 5.6m 3m 6.0m 2m 6.4m 1m 6.7m 0 7.0m Units of food (millions) Units of clothing (millions)

  27. A production possibility curve Units of food Units of clothing (millions) (millions) 8m 0.0 7m 2.2m 6m 4.0m 5m 5.0m 4m 5.6m 3m 6.0m 2m 6.4m 1m 6.7m 0 7.0m Units of food (millions) Units of clothing (millions)

  28. A production possibility curve Units of food (millions) Units of clothing (millions)

  29. w A production possibility curve x Units of food (millions) Units of clothing (millions)

  30. The Economic Problem • The production possibility curve • what the curve shows • microeconomics and the p.p. curve:

  31. The Economic Problem • The production possibility curve • what the curve shows • microeconomics and the p.p. curve: • choices and opportunity cost

  32. The Economic Problem • The production possibility curve • what the curve shows • microeconomics and the p.p. curve: • choices and opportunity cost • increasing opportunity cost

  33. 1 1 2 1 Increasing opportunity costs x y Units of food (millions) z Units of clothing (millions)

  34. The Economic Problem • The production possibility curve • what the curve shows • microeconomics and the p.p. curve: • choices and opportunity cost • increasing opportunity cost • macroeconomics and the p.p. curve:

  35. The Economic Problem • The production possibility curve • what the curve shows • microeconomics and the p.p. curve: • choices and opportunity cost • increasing opportunity cost • macroeconomics and the p.p. curve: • production within the curve

  36. Making a fuller use of resources x Production inside the production possibility curve y v Food O Clothing

  37. The Economic Problem • The production possibility curve • what the curve shows • microeconomics and the p.p. curve: • choices and opportunity cost • increasing opportunity cost • macroeconomics and the p.p. curve: • production within the curve • shifts in the curve

  38. Growth in potential output Now Food O Clothing

  39. Growth in potential output 5 years’ time Food Now O Clothing

  40. Growth in potential and actual output Food O Clothing

  41. Growth in potential and actual output y x Food O Clothing

  42. Canada’s Economic Goals • Political stability • Reduced Public Debt • Economic growth • Increased productivity and Efficiency • Equitable distribution of Income • Price Stability • Full Employment • Viable balance of payments and Stable Currency • Economic Freedom • Environmental stewardship

  43. The Economic Problem • The circular flow of income • firms and households

  44. The circular flow of goods and incomes

  45. The Economic Problem • The circular flow of income • firms and households • goods markets • real flows: goods and services

  46. The circular flow of goods and incomes

  47. The circular flow of goods and incomes Goods and services

  48. The Economic Problem • The circular flow of income • firms and households • goods markets • real flows: goods and services • money flows: consumer expenditure

  49. The circular flow of goods and incomes Goods and services

  50. The circular flow of goods and incomes Goods and services $ Consumer expenditure

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