Economics Ms. Perez

Bell ringer: What role do you play in today economy? Do you contribute to it? How?

Personal economics The study of the roles people play in an economic system Worker Citizen Consumer

What are some economic choices that you make? What you buy? What you save? What do you WANT to buy? What do you NEED to buy? You make choices economic choices EVERYDAY!

Resources Land Labor Capital Entrepreneurship You need money for these resources

$$$$ Land---> Rent Labor---> Wages Capital---> Interest Entrepreneurship---->Profits

Freedom of choice Right of the buyer to decide how to spend their money Known as supply and demand

Economics Study of the process that involves CHOICE making as people need to satisfy their WANTS vs. their NEEDS.

Economic systems Traditional Command or controlled Capitalist or market Mixed system Table 1- Traditional Table 2-Command or controlled Table 3- Capitalist or market Table 4- Mixed system Table 5-Break up among tables

Bell ringer: Based on presentations yesterday, which type of economic system is the U.S.?

7th hour Table 1- Traditional Table 2-Command or controlled Table 3- Capitalist or market Table 4- Mixed system Table 5-Traditional Table 6-Command or controlled Table 7- Capitalist or market Table 8-Mixed system

Read your section on page 21-22 Write a summary of the system List 3 advantages and 3 disadvantages of the system You will have 10 minutes to do this

The United States Mixed system Owner could open a factory in Illinois and hire 50 people but he must pay them minimum wage and operate factory according to safety features determined by the government.

Gross domestic product Total value of ALL final goods and services in an economy Consumer spending+government spending+ business investments + Foreign trade=GDP

GDP-Is it counted and where? Get out a piece of paper and number it 1-6

Write down if this is an example of C if the item is counted as consumer spending I if the item is counted as business investment G if the item is counted as government spending F if the item is counted as foreign trade N if the item is not counted

You spend $5 to attend a movie C if the item is counted as consumer spending I if the item is counted as business investment G if the item is counted as government spending F if the item is counted as foreign trade N if the item is not counted

2. The government increases its military expenditures by $1 billion. C if the item is counted as consumer spending I if the item is counted as business investment G if the item is counted as government spending F if the item is counted as foreign trade N if the item is not counted

3. You buy General Motors stock for $1000 on the stock market. C if the item is counted as consumer spending I if the item is counted as business investment G if the item is counted as government spending F if the item is counted as foreign trade N if the item is not counted

4. A housewife does a lot of work caring for her husband and two kids. C if the item is counted as consumer spending I if the item is counted as business investment G if the item is counted as government spending F if the item is counted as foreign trade N if the item is not counted

5. You pay tuition to attend an economics course. C if the item is counted as consumer spending I if the item is counted as business investment G if the item is counted as government spending F if the item is counted as foreign trade N if the item is not counted

6. You pay $300,000 for a house built 3 years ago. C if the item is counted as consumer spending I if the item is counted as business investment G if the item is counted as government spending F if the item is counted as foreign trade N if the item is not counted

Consumer Price Index Change in price over time of a specific group of goods and services that are used by average people Also called cost of living Example: Cost of milk in 1980 was $2.16 Cost of milk in 2011 is $3.36

Inflation When price increases Dollar can’t buy as much

What causes inflation? Inflation is caused by change in interests Surging economy

Inflation effects? Who is helped by inflation? Who is harmed by it?

Helped or harmed? A family that bought a house and has a fixed interest rate mortgage

Helped! Helped—mortgage payment doesn’t change. Same house would cost more today

Helped or harmed? A retired person who lives on fixed interest from bank certificates of deposit (CDs)

Harmed Can’t buy as much with fixed income

Helped or harmed? The federal government, which has a $4 trillion debt?

Helped Debt total doesn’t hold as high of a value

Helped or harmed? A retired teacher whose income comes from a fixed income pension?

Harmed Same amount of money

Helped or harmed? A savings and loan which has many fixed interest rate mortgages outstanding?

Harmed Taking in same amount of money & it is not worth as much

Helped or harmed? A two income family. The wife is a medical doctor, and the husband is a financial analyst?

Neither Their salary will go up and so will prices

TOTD On the same piece of paper where you wrote your response to the GDP questions and the inflation questions write this down Write down one example of a group that would be helped or harmed by inflation. Identify if this group has been helped or harmed

Bell ringer: Identify if this is part of the GDP and where it is counted? General Motors buys new car-making robots C if the item is counted as consumer spending I if the item is counted as business investment G if the item is counted as government spending F if the item is counted as foreign trade N if the item is not counted

The GDP is one way to measure the business cycle

Business cycle Swings up and down in GDP Prosperity/Peak Recession/Contraction Depression/Trough Recovery/Expansion

The Business cycle-Copy down chart Prosperity/peak Recovery/expansion Recession/contraction Depression/trough Years----->

http://www.youtube.com/watch?v=MHPUdvKi7dc&feature=related

As a group create someway to demonstrate 1 point in the business cycle Rap Scenario/skit Prosperity, Recession, Depression Or Recovery, Extra credit- if you include more then one

As a group create a story, skit, song/rap that demonstrates 1 stage in the business cycle Scenario/skit Prosperity, Recession, Recovery, and Depression Extra credit if one then 1 is represented

Group share!

Global Economy Does what’s happening in the rest of world effect the US? How?

9/11 Gas prices Job security Inflation Value of the dollar

Global Economy Why is this international trade so important? Think about those things we would not have? Think about things that other countries wouldn’t have?

Global Economy Have computers changed the way business is done?

Computers have changed Global business Speed in the office elimination of jobs because of efficiency Creation of computer jobs Internet-global business in seconds Doing business with people you may not have Skype meetings

Which countries do you think are the most economically stable? Why?

U.S., Great Britain, Germany, Japan, France and Canada Production, technology, lots of jobs, good governments