ECONOMIC PRINCIPLES CH. 18&19

GOODS AND SERVICES Goods- production output in the form of material items such as books, movies, or automobiles Services- Work performed for someone else (hair stylist, home repair, entertainment) Factors of Production Resources necessary to produce goods and services Natural Resources- Actual surface land, fish, animals, forest, mineral deposits Labor- includes anyone who works to produce goods and services (human resource) Capital- manufactured goods to make other goods and services (machines, buildings, tools used for assembly- capital goods) Entrepreneurs- individual who starts a business, introduces new products, and improve processes

GROSS DOMESTIC PRODUCT GDP is total value, in dollars, if all the final goods and services produced in country during a single year Measuring GDP- multiply price of each good by the quantity produced and then add the amounts Quantity vs. Quality- GDP measures quantity produced, not quality produced Net Domestic Product- accounts for the fact that some production is only due to depreciation Cars and refrigerators will depreciate at moment of purpose

ECONOMIC SECTORS AND CIRCULAR FLOW Market- Free and willing exchange of goods and services between buyers and sellers Economic activity is shown by a circular flow of resources among consumer sector, business, government and foreign sector Consumer Sector Consumers earn their income in factor markets workers earn wages, tips, and salaries Business Sector Individuals spend money in product markets where goods and services are sold Will purchase capital goods to continue producing more goods Government Sector Federal, state and local purchases resources in factor markets Taxes, fees, tuition, hospital fees are examples of revenue The Foreign Sector Sell and buy goods and services from other countries

PROMOTING ECONOMIC GROWTH Economic growth occurs when country’s goods and services increases over time Productivity- efficient use of resources/ measured by amount of output for produced by a given level of inputs over a specific period of time Specialization- concentrating on producing goods and services that they can do better than anyone else Division of Labor- breaking jobs down into small tasks performed by different workers Human Capital- the sum of people’s skills, abilities, and motivation Economic Interdependence- we rely on others, and they rely on us to provide goods and services

HOMEWORK!! Write 4 clarifying questions that relate to the notes on this power point and bring them in next class. It should be ready to be checked at beginning of class. What if I have no questions….Sure you do!! Create questions that you would like to see on the quiz or test, or that other students may want to know the answer to