DO NOW ACTIVITYDO NOW ACTIVITY  Why do you think that some countries grow at a faster pace than other countries?  What contributes to this growth?  TURN IN BELL RINGER

 Macroeconomics- the study of behavior and decision making of entire economies.  Trends of the economy as a whole  Microeconomics- study of the economic behavior and decision making of small units.  Individuals, families, households, and businesses.  Economists measure economic well-being by calculating the nation’s gross domestic product (GDP)— the total value of all final goods and services produced in an economy.  Follow GDP to predict business cycles  Business Cycle- period of macroeconomic expansion followed by a period of contraction (decline).  May last a year or continue for many years.  The government plays a role in attempting to prevent wild swings in economic behavior.  Where we are in the business cycle affects our every day life Tracking the Business Cycle

Promoting Economic Strength  The government creates public policy to stabilize the economy— policy makers want high employment, steady growth, and stable prices.  Employment- the federal government wants to provide jobs for everyone who is able to work.  We want an unemployment rate of about 4-6 %.  Growth- We want a higher standard of living than that of previous generations.  For each generation to do better—the economy must grow to provide better goods and services to following generations. (GDP measures such growth!)  Economic Citizenship- As a voter—your elective choices will help guide government economic policy (like Obama trying to pass the Health Care Bill)

Cont.  Stability- gives consumers, producers, and investor’s confidence in the economy and in our financial institutions.  General price levels are one indicator of stability  When prices increase—consumers feel the strain (especially those on fixed incomes)  When prices decrease—producers and consumers feel the strain.  The health of the nation’s financial institutions are another indicator of stability  We want to know that when we go to the bank, our money will be protected from fraud or mismanagement and shielded from the effects of economic downturn.  Federal government monitors and regulates American banks and other financial institutions.

Technology and Productivity  The American economy maintains a far higher standard of living than most of the world.  We can preserve a higher standard of living by increasing productivity—shifting the production possibilities frontier outward. Through work ethic (a commitment to the value of work and purposeful activity).  We can also increase productivity through Technology.  Technology- the process used to produce a good or service.  Improvements allow an economy to produce more output (goods and services) from the same or smaller amount of inputs or resources.  **We can produce more with less goods (or at least the same amount) **  Technology allows the U.S. economy to operate more efficiently and productively.

Government’s Role  Governments role- the government provides incentives for innovation (because innovation helps the economy grow)  Government gives (FREE MONEY) grants to research and development projects  Government’s own research institutions produce new technologies  NASA- creates technology to blast humans into outer space!  NASA also produces “spinoffs” for products that have commercial use  Scanner for firefighters to see “invisible flames”  Muscle stimulator for paralyzed people  Government also offers inventors patents and copyrights.  Patent - gives the inventor exclusive right to produce the product for 20 years!  Copyright - grants an author exclusive rights to publish and sell their creative works.