Economics

1. Economics

2. Essential Questions • What are some institutions in an economic system? • How do they work together?

3. Economic Cycle

4. What is it? • The natural fluctuation of the economy between growth and recession • Influenced by many factors (production, unemployment, consumer spending) • It can move very quickly or very slowly between the highs and lows

5. Growth vs. Recession Growth Recession Decline in economic activity Economy is getting weaker • Economy is getting stronger • More goods are being produced

7. Gross Domestic Product (GDP) • Total value of all goods and services produced in a country during a specific time • Acts as a “scorecard” to show how healthy a country’s economy is • Current US GDP: $20494.10 billion, 33.06% of the global economy

8. Bell Ringer: • How did Wall Street get its name?

9. Economic System

10. The Different Institutions • Business Firms • Banks • Government Agencies • Labor Unions • Corporations

11. Corporations • Business organization owned by stockholders • Multiple companies organized as a single business • i.e. 3M, ABC, CBS, NBC, Nike, Under Armour, Campbell Soup, Chevron, Office Depot

12. Business Firms • A commercial organization that sells goods or services for a profit • Owns or operates multiple establishments • Synonymous with company

13. Banks • Institution that receives, lends, exchanges, and safeguards money • Lent money comes from the investors who keep their $ in the bank (YOU!!) • i.e. Bank of the West

14. Government Agencies • Administrative unit of the government • i.e. Federal Deposit Insurance Corporation, Securities and Exchange Commission, IRS

15. Labor Unions • Organization of wage earners or salaried employees who protect each other from and deal with employers • i.e. AEA, NEA

17. Bell Ringer • Describe the different economic institutions.

18. What is… The relationship between these institutions? Or How do they work together?

19. The Relationship… • Labor unions protect the worker/consumer • Allow workers to have free time and (some) money

20. Which allows… • People to place their money into banks • That lets them save money $

21. Or… • Invest their money in corporations • Where they become share holders

22. These corporations… • Enter into contracts with other companies

23. Which are regulated by… • Government agencies • That set policies and rules businesses are supposed to follow

24. In order to… • Protect the consumer/laborer • Who is a member of the union

25. Entrepreneurship:

26. Entrepreneur • A person who starts a business and is willing to risk loss in order to make money • Examples: Duck Commander, Orange County Choppers, Microsoft, Ford etc.

27. Market Structure • There are four types of markets: Perfect Competition, Monopolistic Competition, Oligopoly, & Monopoly

29. Perfect Competition • A large number of small firms compete against each other • No Single firm has significant power • All firms maximize profits and they sell identical goods

30. Monopolistic Competition • A large number of small firms compete against each other • Sell similar but different products • Certain degree of market power • Consumer choice increases • Example: Breakfast Cereal

31. Oligopoly • Dominated by a small number of firms • Usually 3-5 total • Limited competition, firms set the prices • Products may be similar or differentiated • Example: Gaming consoles

32. Monopoly • A single firm controls the entire market • Monopoly sets the price • No consumer choice • Example: local phone and power companies

33. Inflation

34. What is it? • General increase in prices while purchasing value of money stays the same, declines, or rises slower than the increase in prices

35. Imagine you have $40 for groceries per week. Look at last year’s column. That is what you could buy. Now, imagine that prices go up but you still have $40. Look at this year’s column. That is what you could buy.

36. Impact • Can have a negative impact on society when prices of goods and services rise faster than wages • Think of a balloon as it is being blown up and pops because there is too much air in it

37. Surplus • An excess of product or supply over demand • In other words: Something that is left over

38. Deflation

39. What is it? • Decline in prices of goods and services • Associated with the contraction of available money or credit in an economy • Long term: purchasing power of currency goes up

41. What is it? • The amount of goods and services that are available for people to buy compared to the amount of goods and services that people want to buy • If less of a product than the public wants is produced, the law of supply and demand says that more can be charged for the product.

46. Bell Ringer • How do countries rely on each other for economic support? Do some countries have more economic resources than others? Discuss at your tables.

47. Interdependence

48. Essential Questions • What is economic interdependence? How does it affect the economic development of nations? • What are some examples of economic agreements between nations? How have they affected the economic development of those nations?

49. Interdependence • The reliance of nations on each other for economic growth

50. Nations • People of multiple races and cultures organized into a single state/country