Production costs  Supply and Demand  Competition  Encourages efficient use of resources  Want to lower prices to compete yet make a profit

Consumers  Consumer sovereignty  Controlling the influence of the consumer  Boycott

Economic Ups and Downs

Business Cycle   Ups and downs of the economy  Follow a pattern  Peak  Contraction (recession)  Trough  Expansion

Economic Extremes  Recession  Period of significant decline  Production > consumption  Depression  A major economic downturn  Recession can lead to a depression  Demand and prices  Unemployment

Economic Extremes (con’t)  Inflation  Growth not always good  Prolonged rise in prices  Reduces purchasing power

Factors Affecting Ups & Downs  Consumer confidence  Technological innovation  Government Policies  War

The Economic Report Card  Gross Domestic Product (GDP)  Total value of goods and services produced in a country  Counted only when they are new  Compared year-to-year  Unemployment rate  Consumer Price Index (CPI)  Change in price over time

 3 Levels of Government  4 major roles in the US Economy  Ensuring Economic Stability  Regulating Economic Activity  Redistributing Income  Provide public goods and services The Government’s Role

Ensuring Economic Stability  2 basic approaches  Fiscal  Monetary

Regulating Economic Activity  Protecting:  Environment  Consumers  Workers  Promoting Competition  Monopoly (trust)  Antitrust laws

Redistributing Income  Social Security and Medicare  Retirement  Survivors’  Disability  Medicare  Unemployment Insurance  Public Assistance Programs  9 main programs

Provide public goods and services  National defense  Police and fire protection  Courts and correctional institutions  Public parks  Street, highway, and bridge construction  Public education  Public Transportation

Research Activity  Temporary Assistance to Needy Families (TANF)  Supplemental Security Income (SSI)  Food Stamps  Supplemental Food Program for Women, Infants and Children (WIC)  National School Lunch and School Breakfast Programs  Food Distribution Program  Medicaid (not medicare)  State Children’s Health insurance Program  Housing Programs