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The American Economy Today, you will need notebook paper . Goods: tangible products that satisfy our wants and needs. 4 FACTORS OF PRODUCTION- resources necessary to produce goods and services. Natural resources Labor Capital Entrepreneurs. NATURAL RESOURCES.

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Presentation Transcript
slide1

The American Economy

Today, you will need notebook paper

goods tangible products that satisfy our wants and needs
Goods: tangible products that satisfy our wants and needs.
  • 4 FACTORS OF PRODUCTION- resources necessary to produce goods and services.
    • Natural resources
    • Labor
    • Capital
    • Entrepreneurs
natural resources
NATURAL RESOURCES
  • Gifts of nature that make production possible.
    • Fertile farmland
    • Abundant rainfall
    • Forests
    • minerals
labor
LABOR
  • Nation’s labor/WORK force
  • A.k.a. human resources
  • Physical and mental efforts that people contribute to the production of goods and services
capital goods
CAPITAL Goods
  • Capital goods!
  • Tools and machinery and buildings used to make other products
  • THEY ARE THE RESULT OF PRODUCTION
  • OR MONEY NEEDED TO DEVELOP GOODS
entrepreneurs
ENTREPRENEURS
  • Individuals who start new business, introduce new products and improve management techniques
  • Willing to take risks
  • Use f.o.p. to produce new products
the gdp gross domestic product
THE GDP: GROSS DOMESTIC PRODUCT
  • WE can measure our economic success by our income and ability to provide for ourselves and our families
  • The success of the OVERALL economy is measured in a similar way.
  • MEASURE OF Economy's SIZE IS THE GDP!
gdp gross domestic product
Total value in DOLLARS, of all the FINAL goods and services produced in a country during a SINGLE year.

FINAL good- ex: loaf of bread sold to you.

INTERMEDIATE good- goes into making a loaf of bread:

Wheat

Sugar

Honey….

ARE NOT COUNTED IN GDP!

GDP: Gross Domestic Product
slide12

GDP is an important way to measure the STANDARD of LIVING

  • Standard of living-
    • Quality of life based on the possession of necessities and luxuries that make life easier.
    • IF GDP grows faster than the population, there are more goods and services for EACH of us to enjoy!
quantity vs quality gdp measures quantity
Quantity-GDP does not reflect improvements in the quality of products.

DIFFERNECE b/w a $1500 computer purchased today, than a computer costing the same amount a few years ago.

FOCUS ON THE QUALITY OF IMPROVMENT!

QUANTITY vs. QUALITYGDP measures: QUANTITY
review 4 factors of production
REVIEW: 4 FACTORS OF PRODUCTION:

1. natural resources

2. labor

  • Physical and mental

3. Capital

4. Entrepreneurs

GDP based on __________?

QUANTITY

section 2 economic activity and productivity
Section 2: Economic Activity and Productivity
  • GET A BOOK… look @
  • Circular Flow Model: pg 429
  • The flow of resources, goods and services and $$ in a market system is CIRCULAR!
  • Called a circular flow diagram.
circular flow why is it circular
Circular Flow: WHY IS IT CIRCULAR?

1. Consumers earn income in FACTOR MARKET: the market where productive resources are bought and sold.

  • Here we earn salaries in exchange for labor.
  • People who own land can loan it out: RENT!
  • People who own capital exchange it for interest

2. When those people get their income, they spend it inthePRODUCT MARKET: the market where producers offer goods and services for sale.

government sector
Government Sector:
  • Made up of all 3 levels of government:
    • Federal
    • State
    • local.
    • It also can produce goods and services (ntl.defense, education, housing, transportation)
    • Public universities charge tuition, hospitals charge fees, buses charge fares.
foreign sector
Foreign Sector
  • Represents all the countries in the world
  • Arrow at both ends b/c we SELL products to and BUY products from other countries.

_________________________________

Define the following: pgs 430-432.

(7 minutes)

Productivity, specialization, division of labor, human capital and economic interdependence.

section 3 capitalism and free enterprise
Section 3: Capitalism and Free Enterprise
  • Capitalism- where WE own most, if not all means of production
  • Free enterprise- businesses can compete for profit with LITTLE gov’t inference
consumer sovereignty
CONSUMER SOVEREIGNTY
  • WE ARE IMPORTANT B/C BUSINESS WANT TO TRY TO PRODUCE THE PRODUCTS THAT WE WANT
  • CONSUMER IS KING or ruler of the market.
  • ANOTHER FEATURE OF CAPITALISM:
    • Private property rights-freedom to own and use or dispose of own property as we choose
    • Competition- struggle b/w buyers and sellers to get best products at the LOWEST prices
spread of capitalism
SPREAD OF CAPITALISM
  • Grew from medieval and early Europe.

1. People should work for economic gain

2. Gov’t should have a limited role in economy

  • ADAM SMITH-Scottish economist and philosopher.
slide25
Wealth of Nations (1776)
  • Described basic principles of economics for the 1st time.
  • From this we get:
    • LAISSEZ-FAIRE economics: “to let alone” gov’t should not interfere in marketplace.
section 4 the economy you
Section 4: THE ECONOMY & YOU
  • CONSUMER BILL OF RIGHTS:
    • Right to a safe product
    • Right to be informed
    • Right to choose
    • Right to be heard
    • Right to redress (get $ from manufactures if product causes physical or financial harm)
quiz tomorrow
Goods

Services

Factors of production

4 factors of production

GDP

Standard of living

Circular flow model

Consumer sovereignty

Private property rights

Competition

Productivity

Specialization

division of labor

human capital

economic interdependence.

QUIZ TOMORROW-