1 Economics Basics Ms. Green

 Well it is the study of everything  about decisions being made  From how things are made, bought, sold and used to decisions on how to spend our time and resources What is Economics?

 Studying Gross Domestic Product (GDP) and unemployment rates to understand how country or large corporation is doing.  GDP is the value of every good or service produced in a country.  What are some goods and services? Macroeconomics

 Develop models that explain the relationship between factors as national income, consumption, unemployment, inflation, savings, international trade.Macroeconomics

 GDP = C + I + G + (Ex - Im) “C” =spending by consumers, “I” = investment by businesses, “G” = government spending “Ex” = total exports (country sells)  “Im” = total imports (country buys)  Divide GDP by number of people equals standard of living Calculating GDP

 This measures what the “average” person in the country should have.  US has one of the highest standards in the world. Standard of Living

 studies the behavior of how the individual modern household and firms make decisions in using resources.  Studying how you spend  your money, the decisions  you make, and how you  use your time is  microeconomics. Microeconomics

 Big and Small Macro and Micro

 What we need to have vs. what we want to have  Need: Food, water, house  Want: Ipod, Cable TV, Air Jordans  Sometimes needs and wants overlap. ◦ E.G. cake is a food, but it is not a need, but a want. In general, you need a basic diet to survive, but that diet does not need to include cake. Wants and Needs

Wants and Needs Activity