“…the study of how wealth* is created and distributed**.” *“anything of value,” including products produced and sold by business **“who gets what”
o Ownership of factors of productionfactors of production o The answer to four basic economic questions about nation’s economic activity What & how much will be produced? How will it be produced? For whom will it be produced? Who owns/controls factors of production?
“…resources used to produce goods and services.” 1. Land/natural resources 2. Labor 3. Capital 4. Entrepreneurship
CapitalismCommand (Market)(Planned) SocialismCommunism
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Examples
Monetary Policy- Federal Reserve determines size of money supply & interest rates Controlled by the Federal Reserve (FED) Seven Member Board Chairman ©2007 Microsoft PowerPoint
Fiscal Policy- Influences amount of savings and expenditures by altering tax structure and government spending Controlled by Congress/Budget Process
“…a shortfall created when the federal government spends more in a fiscal year than it receives.” U.S. National Debt Clock
Key industries owned/controlled by government Land, buildings, and raw materials may be property of state Private ownership permitted to varying degrees People chose own occupations National goals determine what/how produced Uses taxes, rents, and wages to control distribution
Karl Marx- Father Advocated classless society Citizens own all economic resources Workers contribute based on ability & received benefits based on need Examples- North Korea & China Centralized planning- sets prices & wages Emphasis on gov’t needs not consumers No job choice- professionals better off than factory workers