GLOBALIZATION UNIT LESSON 1 GLOBAL ECONOMICS

OBJECTIVES Review economic systems. Introduce key economic terms related to globalization.

WARM UP & REVIEW What is economy? Way in which we manage resources to meet needs What are resources? Human: time, $, skill National: natural resources, capital, labor force and technology Limited resources = Scarcity

BASIC ECONOMIC SYSTEMS 3 Basic Questions? What to produce? How to produce? For whom to produce? Basic Systems? Traditional Cultural needs, subsistence Market Free choice, competition Command Govt decides, controls MIXED Economics Study of decision- making & resource allocation.

THE LAW OF SUPPLY & DEMAND Supply The amt of a certain good or service producers are willing to supply when receiving a certain price Law of Supply: The higher the price, the higher the quantity produced Demand How much (quantity) of a product or service people are willing to buy at a certain price Law of Demand: The higher the price, the less demanded

WHAT’S THIS MEAN? Desire equilibrium: Quantity supplied = quantity demanded. Neither shortage (prices rise) nor surplus (prices drop)! “Market fluctuations” Video

PRACTICE The National Football League “blocks out” local television of football games when the game in question is not sold out in advance. The NFL supports this action because it A. Increases the demand for football tickets. B. Reduces the supply of football tickets. C. Reduces the price of football tickets. D. Increases the amount of money that the networks pay to televise NFL games.

GLOBAL ECONOMY Goal: Effective resource mgmt for most efficient production Weigh opportunity cost Value of alternative that must be forgone to pursue certain action Specialization & Comparative Advantage Nation makes certain products at lower cost (higher quality) than others

WHY GLOBAL TRADE? Make better product Make cheaper product If can’t make on own = import Exchange rates = more for $ elsewhere Sell to more = make more $ Ease of access to markets

GLOBALIZATION REVIEW What is globalization? Growing integration of the world’s economies and societies. How join in? Open country to free trade Open currency markets Privatize business

GLOBAL IMPACT As global economy becomes more interdependent Dvpt depends on wise use of globally scarce resources Decisions in one location affect all others

ACTIVITY Illustrated Global Economic Terms Working in groups of 4, create illustrations for each of the terms on your vocab page.

CLOSURE What factors drive global economic decision making? Resource Scarcity Supply & Demand Opportunity Cost Comparative Advantage

HOMEWORK Choices Reading – International Trade: Competition & Cooperation in a Globalized World Available in classroom