Economics 101 What is an economy??? economy - Activities related to the production and distribution of goods and services in a particular geographic region .

+ Economic Systems An economic system is: -the way government and businesses work together to provide goods and services to consumers +

3 Economic Questions 1. What goods & services should be produced? 2. How should these good and services be produced? For whom should these goods and services be produced?

Pure Command Economy Government controls decision making Government owns businesses Government decides answers to 3 economic questions Examples: North Korea, Cuba

Market Economy Consumers decide what will be produced Marketplace decides answers to 3 economic questions Based on principles of supply/demand Example: USA

+ Mixed Economy Includes aspects of all economies Government and private individuals control marketplace Example: Canada +

The Business Cycle

Stages of the Business Cycle Expansion: Time when the economy of a country is thriving. Businesses are expanding and hiring more employees, and selling more products/services. Peak: The point at which sales begin to decline. Recession: A time when the level of economic activity begins to decline. Trough: Sales begin to increase due to low prices. Some investors buy share in a company guessing the value will begin to increase.

Recession vs. Depression Recession: A significant decline in activity across the economy typically lasting for a period of 6 months or more Depression: Sustained, long-term downturn in an economy

Activity http://money.howstuffworks.com/recession.htm Read through tutorial and take quiz at the end to test your knowledge!