LO1 What is economics? LO2 How does fiscal and monetary policy impact the economy? LO3 What is the free market system and the supply and demand relationship? LO4 What are planned market systems? LO5 What are mixed market systems? LO6 What tools are used to evaluate economic performance?.
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LO2How does fiscal and monetary policy impact the economy?
LO3What is the free market system and the supply and demand relationship?
LO4 What are planned market systems?
LO5What are mixed market systems?
LO6What tools are used to evaluate economic performance?
The Framework for Business
Source: TABLE B–1.—Gross domestic product, 1959–2008, Economic Report of the President: 2009 Spreadsheet Tables, updated January 14, 2009, Government Printing Office website, http://www.gpoaccess.gov/eop/tables09.html, accessed January 20, 2009
In late 2008:
Country’s Overall Economy
The federal government budget outlines revenue and expenses
Source: Who is the FDIC?, FDIC website, October 27, 2008, http://www.fdic.gov/about/learn/symbol/index.html, accessed January 22, 2009
The FDIC insures deposits in banks and thrift institutions up to $100,000
The amount was increased to $250,000 at the end of 2008
Since 1934, no depositor has lost a single cent of insured funds because of bank failure
The right to own a business and keep after-tax profits
The right to private property
The right to free choice
The right to fair competition
Market and Planned Economies don’t meet all needs
As a market dominant economy, the U.S. government still owns/supports enterprises
Gross Domestic Product
Consumer Price Index
Producer Price Index
The rate of price changes across the economy is an economic measure
The government measures prices using the Consumer Price Index (CPI) and the Producer Price Index (PPI)
LO2 Why do nations trade?
LO3 How do we measure trade?
LO4 How do companies reach global markets?
LO5 What are the barriers to international trade?
LO6 What are the benefits and criticisms of the free trade movement?
Business Without Borders
Source: What is countertrade? By Neha Gupta, Barter News Weekly website, March 11, 2010, http://www.barternewsweekly.com/2010/03/11/what-is-counter-trade-1851/, accessed February 10, 2010
….Looking to buy European Cars to sell in the US……Today we buy a car in Europe and bring to the US at a cost of 20000 euros. If the Exchange Rate (ER) is 1.10 or 1.10 for every Euro. The cost of the car in US Dollars is $22000. Going Forward…..
The ER changes….. Scenario….1. if the Euro ER goes down to .90 for every dollar. The cost of the car in US money goes to $18000. Better to have waited.
Scenario….2. if the Euro goes up to 1.30 for every dollar the cost of the car goes up to $26000.00. Buy NOW because it will be much more expensive later.
India: Paneer Salsa Wrap: Cottage cheese with Mexican-Cajun coating
Australia: Bacon and Egg Roll: “rashers of quality bacon and fried egg”
Hong King: Corn Cup: A plastic cup filled with corn off the cob
United Kingdom: Five “Toasted Deli” sandwich options
Japan: Shrimp burgers and green tea flavored milkshakes
Social/cultural differences can rapidly undermine business relationships