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Economics

Economics. The science of Decision making. Economics. The study of how we make decisions in a world where resources are limited. . Types of Economics. MACRO (Very Large) Macro Economics is the study of how a country makes decisions about its resources and money.

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Economics

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  1. Economics The science of Decision making

  2. Economics • The study of how we make decisions in a world where resources are limited.

  3. Types of Economics • MACRO (Very Large) • Macro Economics is the study of how a country makes decisions about its resources and money. • MICRO (Very small) very small • Micro Economics is the study of how individuals make decisions about their resources and money.

  4. Needs and Wants • Needs are things we need for survival, such as food, clothing, and shelter. • Wantsare things we would like to have. • List a few…

  5. Economic cycle

  6. Economic Cycles • In a normal economy, the cycle flow easily. • In a recession, the cycle slows. • In a depression, the cycle stops.

  7. 3 Basic questions • When looking at Economics, it all comes down to 3 basic questions…

  8. What? • Society must decide what to producewith its limited resources. • You choose whether to produce goods or services.

  9. How? • Society must decide how to produce. • How will it be made? • Will an individual, a company or the gov’t create the item?

  10. Who? • Society must decide for whom to produce. • Who will receive the goods and services? • This is the consumer.

  11. Sounds easy, right? • Not really, we do not have enough resources to produce all of the things we would like to have. • Because of that, we must make choices among alternatives. • Through time, 3 major “systems” have developed.

  12. Economic Systems

  13. Traditional Economy • What to produce? • The community produces goods based on its traditional needs. • Like Food, clothes, basic items • How to produce? • It is decided by the individual. • It depends on what you may be “good” at. Hunter? Basket weaver? Sewing? • For Whom to produce? • Self and the community.

  14. Traditional Economy • ALSO- these economies • don’t usually use money • usually can meet their own needs • may have little or no need for outside exchange. • Current Examples: Chad, Amish

  15. Command Economy • What to produce? • All land and resources are owned by the government.  • The government chooses what to produce: Food, equipment, weapons • Consumers have a small selection of goods and services to choose from when they purchase. • How to produce? • Production is carried out according to plans set out by the government. • For Whom to produce? • The Government for its purposes and for their citizens.

  16. Command economy • These economies are also known as: • Socialism • Communism • Current Examples: China, Cuba

  17. Market Economy • What to produce? • Production is based on market demands among consumers. • Consumers have a large selection of goods and services to choose from. • How to produce? • People are free to buy or sell land, resources, and there are many forms of personal property. • Businesses are free to make choices on how and where to produce their item. • For Whom to produce? • The customer

  18. Market Economy • These economies are also known as: • Free Enterprise • Capitalism • Current Examples: U.S., Great Britain, Japan

  19. Do things Change? • SURE… • Ascivilization has progressed, governments have had change the way they answer those 3 basic questionsaccording to their needs at the time.

  20. History • For example, throughout the history of the United States, (although it is prided itself on being a strong capitalist and free market economy), there have been times when the U.S. turned its back on some of the free market principles.

  21. History • As far back as the Revolutionary War, the government has stepped in and ordered factories, farmers, and businesses to produce war goods. • In World War II, this was taken to the extreme as automobile factories were transitioned overnight into tank and ammunitions factories.

  22. This… http://postersandposters.com/cgi-bin/apws/apws.pl?cat=79261

  23. …Became this http://www.gettyimages.com/detail/JC9646-001/Hulton-Archive

  24. Citizens were told what sorts of consumer goods they could and could not buy and the government took a much larger role in the life of consumers. Interestingly enough, some historians argue that if Hitler had done the same thing as the U.S. (switching from consumer goods to war goods) earlier in the war, then the Axis powers could have potentially won the war...

  25. So… • Economics is an interesting, but complicated thing. • Pair and share with a partner • Without looking at your notes… • Tell your partner one thing that you now know about economics and/or the three types of economies. • Then, have your partner do the same. • Do not repeat the same thing your partner said. • Continue until both partners run out of new information and then look at your notes and see what you left off. 

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