ECONOMICS

MARKET ECONOMY Capitalism Based on Supply and Demand No Government Intervention

LAW OF SUPPLY Supplier will be willing to offer more goods at a higher price

LAW OF DEMAND The higher the price, the less people will demand it

COMMAND ECONOMY Government makes all Economic Decisions Socialism and Communism

MIXED ECONOMY United States, has a mixed Economy but, it is more Market then Command

U.S. ECONOMY Banking Regulations Governmental Protection Agencies  Ex: E.P.A., F.D.A., etc. Public Utilities= Legal Monopolies because they are regulated Government Intervention is needed at times, but not always the best solution

ENTREPRENEUR Person who starts a business Capital, anything used to produce something else  Tools, pizza oven, etc.

THREE TYPES OF BUSINESS Sole Proprietor Partnership Corporation

PARTNERSHIP Business owned by two or more people

CORPORATION Owned by stockholders and run by hired help Where most profits in America are produced

STOCKS AND BONDS Stocks = Ownership Bonds = Loan

LABOR UNIONS Formed because employees wanted control over working conditions  Safety, minimum wage, child labor, etc.

COLLECTIVE BARGAINING Employee and Employer work together to reach an agreement Conflict = workers want more money and benefits, employers want more profits.

FRINGE BENEFITS Vacation Sick Leave Medical Insurance

STRIKE Work Stoppage.

PERSONAL FINANCE Fixed Expenses vs. Variable Expenses

FIXED EXPENSES Don’t change as fast-rent, mortgage payment, insurances

VARIABLE EXPENSES Can change month to month (leisure) this is what you have the most control over

TAXES Money paid to the Governments Income tax Sales tax Property tax

TAX METHODS Progressive- More you make higher percentage you pay Regressive- taxes a larger percentage from lower income people (some believe state sales tax is regressive) Proportional- some percentage from everyone(flat tax)

SALES TAX Can be either regressive or proportional, depends on your point of view

BANKING Making loans, most important role High Debt= High Interest Rate

BANK ACTIVITY Depends on Economy Inflation- rise in prices Deflation- decrease in prices Recession- decline in activity

U.S. CURRENCY Has value because U.S. Government and the Economics of the world says it does Not backed by gold or silver

LOANS Helps the Economy grow

FEDERAL RESERVE BANK Created by Congress in 1913 Regulates money supply by influencing borrowing.

FEDERAL RESERVE ACTIVITY Inflation- discourages loans by raising interest rates Recession- encourages loans by lowering interest rates