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Objective #1- Market Systems I.Economics -Study of production, distribution, and consumption of goods and services. - In other words-ppl and machines making, shipping, selling and buying. Economics affects all of us. What do you think is the most important way economics affects your life? Why?

Economic Systems CapitalismSocialismTribalFascismCommunism

Objective #1 A.Capitalism (a.k.a. Free Market)-This is what we have here in the U.S. 1. Most of the capital and business is owned and run by the citizens. a. Capital- is everything you need for a business: tools, machines, and MONEY 2. Business- Anyone can start a business to make or sell goods. a. Business owners decide whom to hire and how much to pay them. b. Gov does NOT own or run most businesses -Businesses still have to follow government regulations and pay taxes. 3.Why does it work-Most people want to improve their lives. –They decide to get an education and job training to find work that gives them satisfaction and income.

Objective #1 Cont… B. Socialism-Gov’t owns and operates a country’s means of production 1. Many businesses are owned and run by the government. 2. Citizens can still decide what kind of job training and education to get. a. They work to improve their lives b. Some businesses are owned by the citizens

Objective #1 cont… C. Tribal- Ppl live near each other in a community & share land/goods. 1. Tribe works together to produce food & goods. 2. The group trades with other groups. -leadership is typically neither formalized nor permanent.

Objective #1 cont… D. Fascism 1. All the capital (tools, machinery, money) is owned by the citizens. 2. Gov’t has tight control over how capital can be used. 3. Citizens have little economic control or power. E. Communism-All capital and means of production are owned and controlled by the government. 1. Gov’t Controls a. Job choices, job training, education choices * INCOME

Objective #2- The Government’s Role in our Economy II. The Government’s Role in our Economy A. Laws & Taxes 1. Laws try to prevent companies from taking unfair advantage of each other. - Ban misleading advertising -Workplace safety standards - Set minimum wage - Prohibit discrimination - Zoning laws 2. The Federal Trade Commission investigates business activities.

Objective #2 Cont… B. Public Goods and Services 1. Gov’t provides many services at little or no direct cost to users. 2. Paid for with tax dollars –Police & Fire, roads, parks, job, training & placement, schools, military, Postal Service C. Regulate Public Utilities 1. Utilities- Electricity, Natural Gas, Water, Sewers & Local Telephone service 2. Utility companies operate without competition but rates are regulated.

Objective #2 Cont… D. Government Helps the Economy 1. Gov’t jobs (building highways or buildings) 2. Cut taxes 3. Interest Rates are set by the Federal Reserve System. –Lower rates encourage borrowing and spending. 4. All national banks belong to the Federal Reserve System.

Objective #2 Cont… E. Government protects the economy 1. U.S. Patent and Trademark Office awards patents for new machines, methods and manufactured products. a. Inventors can keep, sell, or license the patent. 2. The Copyright Office of the Library of Congress in Washington, D.C. issues copyrights. a. People must get permission and pay usage fees to use copyrighted material.

Objective #3 III. Supply & Demand (Goods & Services) A. Goods and Services 1. Goods- basic things to survive. a. Food, Clothing, Shelter, Books, CDs,, automobiles, etc. 2. Services-Ppl also need help from each other and will pay to get it. a. Nurses & doctors heal ppl. b. Teachers educate students c. Scientists develop medicines.

Objective #3 Cont… B. Supply and Demand: The quantity (how much) available affects how much things cost. 1. Supply: how much of something there is. 2. Demand: How much people want or need something.

Objective #3 cont… C. How supply & demand influence prices? 1. Shortage of something the price usually goes up. (Demand is high means prices are high) 2. Excess of something the price usually goes down. (Supply is high means prices are low)

Objective #3 Cont… C. Factors influence supply and demand? 1. Supply-Selling price, Cost of resources Technology, & Competition 2. Demand-Price, Price of related goods, Income, Popularity, Future prices -Competition among sellers usually means there is more supply. -Competition among consumers (buyers) can increase demand. -Substitution: people will substitute one item for a less expensive one

Objective #3 Cont… C. Cont… Factors influence supply & demand 1. shortage of natural resources (water, lumber, gas, etc.) can mean shortage of goods and services. 2. Workers are also part of supply and demand. a. Prices will be lower if many people provide the same services (high supply). 3. They will be higher if only a few provide the service (high demand).

Objective #3 Cont… D. Opportunity Cost-Consumers have to make choices 1. Choices involve tradeoffs--- we give up something to get something else. 2. Everything we do and buy is part of an opportunity. a. Choices about how to use our time and money. 3. With every choice, consumers try to get the highest value. a. How would you spend $25?

Objective #4 IV. Wages and Profits A. Wage- payment to an employee, usually based on hours worked or quantity of goods or services produced 1. Federal government sets a Minimum wage 2. Jobs that need the most workers often do not pay the highest salaries. 3. Jobs that pay the highest salaries often require the most education. Opportunity costs and benefits-the trade off between effort, sacrifice, and Reward for the job.

Objective #4 cont… B. Profit- GAIN 1. gain in business activity for the benefit of the owners C. Money/ Interest 1. Interest can be earned (as in savings) Or spent (as in credit cards) 2. Money- Federal Government prints $ a. Savings are insured in banks ( FDIC) -Inflation-cost increases on things like houses, bread, cars over time. About 3% a year.