The Global Economy

What is the economy? The management of limited resources by a community, state, or nation The production, exchange, distribution, and consumption of goods and services https://www.youtube.com/watch?v=Np-dZSdzymk (Star Wars Economics)

Terms to know Resource – something that is needed Like food, water, shoes, shelter Good – something that you can touch or hold Clothing, an orange, a car, a toothbrush Service – something that someone does for you Cuts your grass, cleans your teeth, cleans your house

Three Basic Economic Questions What to produce? How to produce it? Who gets it? https://www.youtube.com/watch?v=B43YEW2FvDs (start to 1:10)

Types of Economies Traditional Economy Focused on customs, beliefs, and traditions Usually found in rural and developing areas Often relies on hunting, fishing, and agriculture

Command Economy: Government decides what is needed (Communism, North Korea)

Most economies are mixed: aspects of market and command economies Market Economy: Businesses decide what to produce based on what consumers want (Capitalism, U.S.) Most economies are mixed: aspects of market and command economies https://www.youtube.com/watch?v=B43YEW2FvDs (1:10-6:50)

Economic Strength of a Nation Determined by Calculating the Wealth Gross Domestic Product (GDP): The value of all the goods and services produced in a nation Gross National Product (GNP): The value of all the goods and services produced in a nation plus income made from foreign investment (measures growth) Both are used in wealth determination

GDP Cartogram

GDP Per Capita Found by taking the GDP of the entire nation and dividing it by the total population (GDP Per Person) Measures standard of living (what does this mean)

What areas are wealthy? What areas are poor?

Economic Question… What is a better measure of a countries economic strength, GDP or GDP Per Capita? https://www.youtube.com/watch?v=rqT5I0etVKg

Supply and Demand Supply & Demand Economic Law: As the price of a good or service increases, consumer demand for the good or service will decrease and vice versa A consumer will purchase more pizzas if the price of pizza falls. The opposite is true if the price of pizza increases. If supply increases and demand decreases, price will drop If supply decreases and demand increases, price will increase http://www.brainpop.com/math/dataanalysis/supplyanddemand/ https://www.youtube.com/watch?v=RP0j3Lnlazs – Supply and Demand Indiana Jones https://www.youtube.com/watch?v=V0tIOqU7m-c – Shifting Supply and Demand

Supply and Demand w/ Pizza

Develop a real world scenario that explains the law of supply and demand…

What is Voluntary Trade? The exchange of goods or services between countries Why might trade occur? What are the benefits of voluntary trade between nations?

Trade Barriers & Trade Corridors Trade Barrier: Anything that prevents trade from happening. Examples? Trade Corridor: Anything that allows or helps trade happen. Examples?

Balance of Trade The difference between exports and imports over a period of time Import: Goods or services being purchased or brought into a country For example; bananas, coffee Export: Goods or services being sold or leaving a country For example; cars, books, movies http://www.usdebtclock.org/index.html

Balance of Trade Surplus: When a nation’s income is more than its spending; when a nation has more exports than imports (Surplus = positive) Deficit: When a nation spends more than it takes in; when a nation has more imports than exports (Deficit = Negative)

US Balance of Trade Do you think we import or export more goods? Does that mean we have a trade surplus or deficit? Which is better? Why? http://www.usdebtclock.org/index.html

U.S. Trade

Who is at fault for the U. S. debt Who is at fault for the U.S. debt? Does the US have a trade surplus or a trade deficit? What is the main factor causing US debt? http://www.youtube.com/watch?v=3ugDU2qNcyg

What is Human Capital The knowledge or skills that people possess that contribute to the economy. What are examples of human capital? How could someone improve their human capital?

How Banks Work Why put money in a bank? Money is safe Banks reinvest your money You earn interest! What happens if everyone withdraws money at once??? http://www.youtube.com/watch?v=qu2uJWSZkck What gives money its value: https://www.youtube.com/watch?v=XNu5ppFZbHo

The World Bank Provides loans to developing countries Looks to promote investment in poorer countries and international trade Goals are to eliminate poverty and hunger Reduce child mortality Fight diseases such as AIDS and Malaria http://www.youtube.com/user/WorldBank?feature=relchannel

Which of these would you rather have?

How do you spend dollars in another country? You must convert your currency World bank sets prices based on currency (economic) strength Use currency conversion tables http://www.xe.com/ucc/

How to Turn 100 Trillion Dollars Into Five and Feel Good About It The Highest-Denominated Bill Ever Issued Gives Value to Worthless Zimbabwe Currency By PATRICK MCGROARTY And FARAI MUTSAKA A 100-trillion-dollar bill, it turns out, is worth about $5. That's the going rate for Zimbabwe's highest denomination note, the biggest ever produced for legal tender—and a national symbol of monetary policy run amok. At one point in 2009, a hundred-trillion-dollar bill couldn't buy a bus ticket in the capital of Harare.