8th Grade Economics

On you handout, write down 5 What does the term ECONOMICS mean to you? On you handout, write down 5 words / thoughts that come to mind when you hear the term “economics”.

What is Economics? The use of limited resources such as money, raw materials, labor, etc by nations and states

Georgia’s Economy How Georgia produces How much debt Georgia has How many Georgia citizens are employed

The better a state’s economy, the happier and secure Economic Growth Always encouraged because… The better a state’s economy, the happier and secure its citizens tend to be! What do you know about the current state of our economy in Georgia? The U.S.?

What is free trade? Importing and exporting products between nations or regions Imports Products coming into Georgia Exports Products leaving Georgia

Benefits of TRADE Allows Georgia to earn money by selling to the rest of the world, while also purchasing products from other places that Georgians need or want.

Why was Georgia founded? England founded Georgia to produce goods for trade Savannah Port Cotton Rice Indigo Lumber Tobacco International trade was essential to Georgia’s survival during the 1800’s.

Today… Georgia relies heavily on TRADE Agricultural products and industries are a major portion of Georgia’s exports Peanuts Tobacco Cotton Soybeans Corn Poultry Paper and Forest Products Manufactured goods Machinery EXPORTS

Goods and Services in GA During the 30’s and 40’s peanuts and pecans became very important to the state of Georgia. Nearly half the U.S. peanut crop comes from Georgia.

Georgia’s Economic Growth and Development What is profit? How is profit an incentive for entrepreneurs? How do entrepreneurs take risks to develop new goods and services in order to start a new business?

What is profit? Amount of money a person or business earns and has left over after all costs of production are paid

What is an entrepreneur? Someone who starts a business or a company, taking great financial risks in the process They take these risks in hopes of earning a profit.

How is profit an incentive for entrepreneurs?

How do entrepreneurs take risks to develop new goods and services in order to start a new business? Entrepreneurs take financial risks! They invest large amounts of money into a new business in hopes that they will earn a profit! If they don’t earn a profit, their financial invest is lost!

Famous Georgian Entrepreneurs

1886, John Pemberton invented a new drink to cure headaches 1892, Asa Candler bought the rights to the drink for $2300 and began marketing “Coca-Cola” as a regular drink instead of as a medicine One of the first entrepreneurs to understand the importance of national advertising resulting in Coke becoming a household name. In 1919, he sold the company to Ernest Woodruff for $25 million making a profit of $24,997,700. Four years later, Robert Woodruff took over and built Coke into what is today!

The Home Depot 1978 - Founded by Bernie Marcus and Arthur Blank in Atlanta By 2004, profits exceeded $5 billion Locations in all 50 states and several foreign nations Arthur Blank is also the owner of the Atlanta Falcons as a result of his success with Home Depot

1927 - Created by Owen Cheatem in Augusta, GA Originally a lumber company Currently largest wholesaler of building products in North America Second largest producer of paper products

1924 – began as a crop-dusting business in Macon, GA Became a major airline under the leadership of C.E. Woolman 1941, moved headquarters to Atlanta 1st transatlantic flight in 1978 Hard times due to economy, 9-11, etc Had to file for bankruptcy in 2003 and re-emerged from bankruptcy in 2007

1967 - Founded by Truett Cathy in Atlanta Original restaurant was called the Dwarf Grill Operates more than 1200 restaurants in 38 states Over $1.7 billion in profits One of the nation’s most successful restaurant chains

American Family Life Insurance (changed to Assurance) Company 1955 – founded in Columbus, GA by three brothers: John, Paul, and Bill Amos Pioneered Cancer insurance in 1958 National’s leader in supplemental health insurance Rated as one of the best companies in the nation to work for Still based in Columbus One of the most popular company mascots: the AFLAC DUCK

Guess Who!

Who am I? This product was initially created to be a medicine. In 1892, Asa Candler purchased this company for $2300. In turn, he sold the company for $25,000,000 in 1919!

Guess Who 1978 - Founded by Bernie Marcus and Arthur Blank in Atlanta By 2004, profits exceeded $5 billion Locations in all 50 states and several foreign nations

Who am I? Georgia company Originally a lumber company Now second largest producer of paper products

Who am I? Atlanta based company Began as a crop dusting business 1st transatlantic flight in 1978 Filed for bankruptcy in 2003 due to economic issues

Who am I? Atlanta based Founded by Truett Cathy Original restaurant was called the Dwarf Grill Over $1.7 billion in profit

Who am I? Georgia based company Supplemental insurance Pioneered cancer insurance Most famous company mascot

SPENDING AND REVENUE

SPENDING

Hmmm… What do you think state and local governments spend their money on??? How do you think state and local governments make money???

State and Local Spending Spend “millions of dollars” on employee salaries and services for citizens Government employees (state or municipal money) Teachers Elected officials Law enforcement Services for citizens Police and emergency services Education Medical services Trash collection, Road construction

How are choices made as to how the government will spend its money? Many services to fund, but revenues are limited (limited supply of money) A budget is used to organize the revenues and spending A budget includes: Projected income Projected spending Services that will receive money Debt affects a budget The greater the state’s debt, the less money for services and salaries.

Factors that affect government spending… Debt The greater the debt, spending decreases Political Parties Republicans  more conservative with spending Democrats  more liberal with spending Taxes The higher the taxes, the more money the government has for spending Population The more people, the greater the demand for services More tax payers Constituencies (a group of citizens an elected official represents and answers to) How a constituency feels “greatly affects how much a leader supports or opposes spending in certain areas” Opportunity Cost Giving up an option in order to obtain the other option

Opportunity Cost Examples… If the government chooses to fund a health care program, it must give up spending money on another program such as education or emergency services. What are a few opportunity cost choices you have had to make in the last two weeks?

REVENUE

Government Revenue Revenue is the money the government takes in to fund its spending Two revenue categories Fees, Fines, and Grants Taxes

Fees, Fines, and Grants

Fees Money that you pay directly for a service, license, or to register for something, etc EX: MARTA fare Toll Road fare Business license fee Driver’s license fee

Fines Money paid as a punishment Traffic violations Littering Failure to abide by local ordinances Failure to obey state regulations

Federal Grants Money the federal government gives to the state or local government in order to help address a specific issue Road improvements School improvements Environment protection

Taxes

Taxes Money that citizens and businesses must pay the government Most common way the state and local governments raise money Property Tax Income Tax

Sales Tax Tax on products you buy Examples Normally a percentage of the total cost Examples CD’s Video Games Clothing Shoes

Property Tax Taxes on property you own Based on the value of your property Examples of property that will be taxed: Cars Homes Other structures

Personal Income Tax Paid to the State of Georgia and the Federal government Based on how much money a person makes Comes out of a person’s paycheck

Personal Money Management

EQ: How can you manage your money sucessfully?

Money Management… Without a money management plan, you may possibly fall into debt. Debt is the amount of money that you owe. This occurs when you spend more money than you actually have.

What is credit? Sometimes, debt isn’t a negative thing. For example, when you buy a house or car… You may borrow money from the bank or other lender and pay back the amount owed plus interest. Interest is normally based on a percentage of the amount owed.

What happens when you are unable to pay back your loans??? When a home loan becomes too much for an individual or couple to pay back, the lender or bank can take back the property. This is known as foreclosure. The borrowers lose their house and any amount of money they have paid on their loan. If you become unable to pay your car payment, the lender can re-possess your property. All above can lead to a very low credit score.

How can you affect the economy through your on personal money management? SHARE OUT!!!

“When people don’t pay their loans, it hurts the economy because lenders make less money and, therefore, have less money to lend. As a result, not as many people can get the loans they need to buy houses, etc.”

As a result…. There is a HUGE snowball effect…. Fewer people purchase homes… Income for realtors, contractors, car salesmen, etc decreases… Sales people make less commission… Waiters get fewer tips… And people begin losing JOBS!

Budget Activity

Saving and Spending Activity

The amount of money that you owe to lenders is called what? A – credit B – interest C – bankruptcy D – debt

Which of the following does a person need to know to plan an effective budget? A – Statewide interest rates B – His or her credit score C - Personal income D – Adjustable rate mortgages

People save money for all of the following reasons except… A – Retirement B – A specific item they want to buy C – Education (College) D – To win the lottery

You should make wise money decisions because… A – You want to buy a video game. B – You want to go bankrupt. C – You want to lose your job. D – You want to be a good citizen and positively contribute to the economy and your community.