Marketing Dynamics Copyright © Texas Education Agency, All rights reserved

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 The student will compare and contrast how economies answer basic economic questions  The student will explain why most economies are mixed.  The student will determine the relationship between government and business. Copyright © Texas Education Agency, All rights reserved

 Economy  Factors of Production  Scarcity  Market economy  Command economy  Mixed economy  Capitalism  Socialism  Communism   Gross Domestic Product   Gross National Product   Business Cycle Copyright © Texas Education Agency, All rights reserved

An economy, or economic system is the way a nation makes economic choices with using its resources Copyright © Texas Education Agency, All rights reserved

All the things used in producing goods and services (factors of production-land, labor, capital, and entrepreneurship) Copyright © Texas Education Agency, All rights reserved

Nations have unlimited wants and needs, but only limited resources to meet them. The difference is scarcity, which forces nations, businesses and people to make economic choices. Copyright © Texas Education Agency, All rights reserved

What goods and services should be produced? How should the goods and services be produced? For whom should the goods and services be produced? Copyright © Texas Education Agency, All rights reserved

No economy can be called purely market or purely command. Elements of both systems can be found in all economies, making all economies mixed. Copyright © Texas Education Agency, All rights reserved

The goal of all economies is to increase productivity, decrease unemployment and maintain stable prices Copyright © Texas Education Agency, All rights reserved

In a pure market economy, there is no government involvement in economic decisions. The government lets the market answer the three economic questions. Copyright © Texas Education Agency, All rights reserved

In a command economy the government answers the three basic economic questions. Copyright © Texas Education Agency, All rights reserved

The U.S. economy is a mixed economy. The most meaningful economic classification is based on how much government interferes with the free market. The following three philosophies have shaped world economies: Copyright © Texas Education Agency, All rights reserved

The economic system most frequently associated with democracy Characterized by private ownership of businesses and marketplace competition Copyright © Texas Education Agency, All rights reserved

Most have democratic political institutions. In socialist countries, the government tries to reduce the differences between rich and poor. Copyright © Texas Education Agency, All rights reserved

Key industries are run by the government (to keep prices low and providing employment Have more social services to ensure certain standard of living for all Copyright © Texas Education Agency, All rights reserved

Totalitarian form of government Gov’t runs everything-one political party Today-few totally communist countries in world Copyright © Texas Education Agency, All rights reserved

Productivity-output per worker hour. Business can increase productivity by investments in equipment or facilities, additional training or financial incentives. Also can reduce work force-increase responsibilities of remaining workers. Copyright © Texas Education Agency, All rights reserved

Gross Domestic Product-measure of goods and services produced using labor and property located in this country Gross National Product-everything produced by U.S. citizens here or abroad. Most nations now use GDP as their principal measure of productivity Copyright © Texas Education Agency, All rights reserved

Standard of Living-measurement of amount of goods and services a nation’s people have. To calculate- divide the GDP by population. Copyright © Texas Education Agency, All rights reserved

Inflation Rate-refers to rising prices. Controlling inflation is one of government’s major goals. One measure of inflation is the consumer price index. It measure change in price over time of some 400 specific goods and services used by the average urban household Copyright © Texas Education Agency, All rights reserved

Unemployment Rate-The higher the unemployment rate, the greater the chances of an economic slowdown Copyright © Texas Education Agency, All rights reserved

Recurring changes in growth and slowdown of an economy is called the business cycle (prosperity, recession, depression, recovery) Cycles are affected by actions of businesses, consumers and the government and vice versa. Copyright © Texas Education Agency, All rights reserved