What is Economics? scarce unlimited needs Economics studies the Production, Consumption, and Distribution of _____________ goods and services for a society with __________ wants and _________. scarce unlimited needs

What is Economics? Resources Demand Resources Demand Basic questions answered by an economic system Production (what is produced) ________________ (things used to make goods and provide services)- Tools, Natural Resources, Human Resources) ___________ (What are the needs or wants) Consumption (how much is produced/consumed) ______________ _____________ Resources Demand Resources Demand

What is Economics? money equipment Land Natural Labor Management Basic questions answered by an economic system How are goods produced? Capital- ____________ to get started and ______________ needed to make product ______ and _________ Resources- materials to make good and energy to support production ____________- Workers _____________- People who plan and supervise the production money equipment Land Natural Labor Management

What is Economics? consumer Storage Basic questions answered by an economic system Distribution (for whom are the goods produced) Marketing Getting the product to the ______________ Advertising Selling ______________ consumer Storage

Scarcity choice Limited supply of resources Requires trade-offs or ____________ What you don’t choose, in favor of something else choice

Opportunity Costs/Incentives Limited supply of resources ____________ costs The ________ value of the good or activity you ________ in favor of something else Incentives ___________ the selection/trade-off Opportunity highest Gave up Influence

Economic systems Traditional Economy Answers to most economic questions are based on tradition/customs Things will be done the way they have always been done Today, there are a few traditional economies. Mostly located in isolated areas within tribes or other very small societies.

Economic systems Choice choose Consumer decisions Profit profit Free Market (buying/selling) Economy Individual _______________ People have the freedom to _________ the product they want ________ sovereignty the individual consumer make economic _________________ (buy/sell/produce) ________ (amount of money a company has after paying all their expenses) people to start businesses to make ________ Choice choose Consumer decisions Profit profit

Economic systems Competition compete Private own Free Market Economy (cont) _______________ Businesses are free to _________________ with others Competition will lead to lower prices and/or better quality products ________ ownership of property/resources Individuals _________ the means of production Competition compete Private own

Economic systems all Government individual Command Economy Centrally planned economy Government makes ____ economic decisions Decides what, how many, how, and who gets it Central ownership of property/resources __________________ provides necessary raw materials, money, and labor Lack of consumer choice The ___________________has little influence in economic decisions all Government individual

Economic systems prices goods competition choice poorly freedom work Command Economy Pros Government can set the _________ of goods Consumers are assured ___________ when they are available Cons No _______________ No ____________ Goods may be ___________ made Individuals have little economic ___________. They must _______ where the government tells them. prices goods competition choice poorly freedom work

Economic systems common Individuals Businesses Government Mixed Market Economy Most ___________ economic system in the world. U.S. and China ____________ and ____________ act as decision makers in the private sector ______________ acts as the decision maker in the public sector Areas such as roads, mail, water, police, military common Individuals Businesses Government

Economic systems Greater Incentives Supply Demand Mixed Market Economy (cont.) ___________ government role than in the Free Market Economy. Less government than the command. Government monitors to prevent businesses from cheating or abusing workers and consumers, making sure products are safe, protecting the environment ______________ __________ and ____________ Greater Incentives Supply Demand

Entrepreneurs businesses Risk money profitable time Profit People who start new ____________ ____________ their ________ and _______ to build a _________ business __________- Reward of success Risk money profitable time Profit

Forms of Business Organization Sole Proprietorship ______ owner who ___________ the business, income, assets, and risks. Usually _________ businesses (restaurant, beauty parlor, gas station) Pro- You’re the ______. Get to decide what to do, ______, charge, make or _____, hours to work Con- You take all the _______. You provide all the _________, pay the bills, hire and fire. If the business fails you lose ______ you put into it. One controls small boss buy sell risks money all

Forms of Business Organization Partnership Business which _______ or more people own. Pro People can pool their ______________ if they don’t have enough individually Can ___________ different skills, share the workload, duties and decisions Con If business fails each partner is ____________ for the ____________ amount of the loss __________________ between partners. May have to be solved in __________ two Money/capital combine responsible total Disagreements court

Forms of Business Organization Corporation A large business that has many ________. A corporation is treated as an __________. Sells shares of ownership called __________. People who buy shares are called _________________. Stockholders _____________ in company profits and risks. owners individual stock shareholders share

Forms of Business Organization Corporations Pro Many people/shareholders ________ the risk Limited _________- Shareholders only risk the money they ________. They are not responsible for all the ___________ of the corporation. Shareholders have a say in how the business is run __________ their shares. The more shares you own the more ____________ you have Con May _________ the money you invested share liability invest debt By voting votes lose

Business Cycle General prosperity. People buying Goods. Businesses hiring and producing More goods and services. Boom period. Economy peaking. Businesses working at full capacity Economy starting to slow down. People buying less. Businesses cutting back. Recession. Production at low point. High unemployment. Reduced spending on goods.

Supply/Demand/Price supply demand price Price acquires low high low The interaction of __________ and ____________ determines _________ __________ determines who ________ goods and services Supply high-price ___________ Supply low-price __________ Many producers-price _________ Few producers-price _________ demand price Price acquires low high low high

Inflation ____ money in the economy than there are goods and services to spend it on Increased demand causes _____ to rise Increased prices due to this is called __________ __________ the buying power of the people’s money Hurts people on a _________ income More prices inflation Reduces fixed

Role of government in the economy competition Supporting marketplace ____________ Enforcing _____________ legislation Supporting business ____________ Discouraging the development of ____________________ Engaging in ___________ trade Anti-trust start-ups monopolies global

Role of government in the economy Regulating business FCC (Federal Communications Commission) ______________ radio and television. Controls the transmissions frequencies. EPA (Environmental Protection Agency) ____________ the environment. Enforces pollution control laws. FTC (Federal Trade Commission) Has the power to investigate businesses. Prevents ____________ and _________trade practices. Can order them to stop breaking laws. Regulates Protects monopolies unfair

Role of government in the economy services goods Providing public _______ and __________ Interstate ______________ __________ service National ______________ Financed by tax revenue and borrowed funds highways Postal Defense

Role of government in the economy Protecting consumer and property rights Contracts are __________ by law. Protect private ownership Government agencies protect public __________ and _____________ Laws protect _____________ rights enforced safety health consumer

Effects of Gov. Taxing, Spending, and Borrowing 16th Amendment Established national __________ tax for U.S. Taxes are collected by the IRS (_________ _____________ ___________) Relationship between tax change and private and business spending Tax __________ leads to decrease in private spending (people have _______ money to spend) Tax __________ leads to increase in private spending (people have _______ money available to spend) income Internal Revenue Service Increase less decrease more

Effects of Gov. Taxing, Spending, and Borrowing Relationship between taxes and government spending ___________ government spending may increase taxes Decreased government spending may ____________ taxes More lower

Effects of Gov. Taxing, Spending, and Borrowing Relationship between government spending and the economy Increased government spending ________ demand, employment, and production __________ government spending reduces demand which may slow the economy increases Decreased

Effects of Gov. Taxing, Spending, and Borrowing Relationship between government borrowing and funds for individual and business borrowing Increased government _________ reduces funds available Decreased government borrowing _________ funds available borrowing increases

Characteristics of Private Financial Institutions Commercial Banks, Credit Unions, Savings and Loans, Receive _________ (FDIC insures $ in banks) Make ______ Pay __________ on deposits Encourage __________ and investments deposits loans interest savings

Federal Reserve System Purposes Supervises __________ practices Issues __________ (makes money) The central _______ of the United States Banker’s bank _________ money to banks Maintains a _________ economy Regulates the _________ supply banking currency bank lends stable money

Federal Reserve System How the FRS maintains a stable economy Slow the economy (fight ___________) _____________ the reserve requirement (the amount of cash a bank must have on hand. This lowers the amount they can loan) ________________ the discount rate (interest rate the FRS charges) _______ government securities (Treasury bills/bonds) Stimulate the economy (__________________) _____________ the reserve requirement _______________ the discount rate ________________ government securities inflation Increase Increase Sell End recession Decrease Lower Purchase

Global Economy Worldwide markets All nations buy and sell goods Nations trade internationally to increase their wealth Countries specialize in the production of particular goods and services

International Trade Why? Countries obtain goods and services they may not produce efficiently Buy goods or services at a lower price Sell goods and services to other countries Technological advances lower costs of production Specialization promotes efficiency and economic growth

Career Opportunities Career Planning- self assessment Employers prefer workers with a strong work ethic Skills and education levels lead to higher income Supply and Demand influence job income Employers favor individuals with technological skills Technological advancements create new jobs