HSA Review: Economics Day 2

Success Criteria The Day After 4/19/2017 1.We can identify the major terms in economics. 2.We can compare and contrast economic policies. 3.We can close read political cartoons. 4.We can analyze political cartoons to understand the message they are trying to send. Answer in a complete sentence What type of economy would you most like to live in? Why? Did the quote activity from yesterday help you understand how to tackle a tricky quote? Why or why not?

House Cleaning Grades are updated! People still need to make up the two Unit 6 quizzes Notebook Quiz next Friday!

What do you remember about economics?

HSA Review April 20th - Economics Today we will be covering the following: Foreign Trade Policy Fiscal Policy Monetary Policy

Tariffs A tariff is a tax on a specific import. For example, the United States has a tariff on broccoli that is imported from India. Tariffs make the prices of foreign products higher. This makes American products the cheapest, so people buy from American companies. In this way, tariffs protect American companies.

Sanctions A sanction is when one nation or a group of nations stop trading with a country as a punishment for doing something wrong Cutting off trade with another country will hurt their economy and hopefully force them to change their behavior The United States has used sanctions against Russia, Iran, and Cuba

Free Trade Getting rid of all tariffs is what we call free trade. Countries make free trade agreements with each other, basically saying “we won’t tax your stuff if you don’t tax ours”

Free Trade cont… The advantage of free trade is that American citizens can buy products for the cheapest possible price. The disadvantage of free trade is that some American companies will go out of business without tariffs on foreign products.

North Atlantic Free Trade Agreement NAFTA The North American Free Trade Agreement (NAFTA) is a free trade agreement between The United States, Canada, and Mexico. NAFTA requires free trade between the U.S., Canada, and Mexico. These three countries have promised not put tariffs on each other’s products on each other’s products.

Economic Indicators GDP – Gross domestic product, the total amount of goods and services created inside a nation CPI – Consumer Price Index, the average price of consumer goods Unemployment Rate – the number of people who do not have a job AND who are looking for a job

Fiscal Policy How the government decides to tax and spend money to influence the economy It does this through raising/cutting taxes and raising/cutting spending The President gives Congress a budget, and they decide what to keep

What Can the Government Do? If the economy is in recession, Congress can reduce taxes. This gives people more money to spend, and that is good for businesses. Congress can also decide to spend more money. If the government spends money to repair roads, build libraries, etc. then more people have jobs. These people then have money to spend, then businesses produce more, and the expansion cycle begins.

Monetary Policy Steps taking by the Federal Reserve Bank to speed up or slow down the economy to keep it growing at a safe rate

Federal Reserve Tools – Open Market Operations Adding or takes money from the total supply Increase money supply by buying gov’t bonds from people Decrease money supply by selling gov’t bonds to people

Interest Rates $50 10% $55 25% $62.50 3% $51.50 The added cost of borrowing money Let’s say Charles wants to borrow $50 from me to buy a new hoodie. He says he’ll pay me back next Friday when he gets his paycheck. Borrowed Interest Rate Shaq Owes $50 10% $55 25% $62.50 3% $51.50