ECONOMICS STANDARD ONE (a): Students will analyze how changes in technology, costs, and demand interact in competitive markets to determine or change the price of goods and services. ECONOMICS STANDARD TWO (a): Students will analyze the role of money and banking in the economy, and the ways in which government taxes and spending affect the functioning of market economies.

(1) Under what market conditions does price change? (2) How is demand changed when income, taste, number of buyers, and prices of other goods change? (3) How does supply influence prices of goods and services in a market economy? (4) How is supply affected when input costs, number of producers, and taxes change? (5) How do spending, saving and production decisions affect a market economy? (6) How is money created in a market economy? (7) How does our government’s taxation and spending policies affect our economy?

ECONOMICS I.The Basics of Economics A. Need vs. Want 1. need something we can’t live without 2. want something we would like to have B.Limited Resources 1. three groups known as the factors of production: land – things in nature labor – work capital – goods used to make other goods

2.Land + Labor + Capital = goods and services that we need

II.Four Economic Systems A. Three Basic Questions of Economics 1. questions about goods and services: What to produce? How to produce? For whom to produce? 2.market economy – decisions are made by each person (United States’ type of economy) market – anywhere that buying and selling take place consumers – people who buy goods and services producers – people who provide goods and services

3.four things make the market system work: competition – when one person tries to outdo another profit – money remaining after costs are paid private property – goods owned by people or by businesses freedom of exchange – freedom to buy and sell at any price

ECONOMY AROUND THE WORLD

III. Supply and Demand A. Supply 1. the amount of a product that is offered for sale 2. Law of Supply Businesses will produce more goods at higher prices than they will produce at lower prices.

B.Demand 1. the amount of a product that consumers want to buy 2. Law of Demand People will buy more goods at lower prices than they will buy at higher prices.

C.Market Price 1. a price that most consumers will pay for a good or service

IV.Money and the Banking System A. Money 1. something given in exchange for goods and services 2. medium of exchange accepted by most people as payment for goods or services 3. measure of value something that is used to measure the worth of goods and services 4. store of value something that will keep its worth over time

B.Characteristics of Money 1. durability – ability to stand up to wear 2. portability – ability to be carried easily 3. divisibility – ability to be divided into smaller units 4. stability – ability to keep the same value over time

C.Services Provided by Banks 1. checking accounts do not have to carry all your money around with you keeps your money safe from being lost or stolen 2. savings accounts used for people who have more money than they need at the time collects interest – money paid for the use of other money other methods of saving – time deposit, retirement accounts, and investing 3. loans money lent to people – bank charges interest to make a profit

D.Buying on Credit 1. credit the buying of goods with borrowed money 2. reasons for using credit: lets people get what they want without waiting to spread payments out over time

V.Taxation A. Local Taxes (Town of Smyrna) 1. sales tax – taxes on the sale of goods and services 2. property tax – taxes on the value of property B. National Taxes (United States) 1. income tax – taxes on money earned by people/businesses 2. social security tax – provides income for the elderly and people who are unable to earn an income

VI. International Trade A. Trade Among Nations 1. Why? a country can produce an item at a lower cost than another country 2. Limits to protect businesses from competition and jobs tariffs – used to encourage people to buy goods made inside the country quotas – limit to put on the number of goods from one country that are brought into another country

3. Free Trade trade that has no limits on it set by the government no nation (country) has completely free trade