1. The Global Economy

2. What is the economy?
The management of limited resources by a community, state, or nation
The production, exchange, distribution, and consumption of goods and services
(Star Wars Economics)

3. Terms to know Resource – something that is needed
Like food, water, shoes, shelter
Good – something that you can touch or hold
Clothing, an orange, a car, a toothbrush
Service – something that someone does for you
Cuts your grass, cleans your teeth, cleans your house

4. Three Basic Economic Questions
What to produce?
How to produce it?
Who gets it?
(start to 1:10)

5. Types of Economies Traditional Economy
Focused on customs, beliefs, and traditions
Usually found in rural and developing areas
Often relies on hunting, fishing, and agriculture

6. Command Economy: Government decides what is needed (Communism, North Korea)

7. Most economies are mixed: aspects of market and command economies
Market Economy: Businesses decide what to produce based on what consumers want (Capitalism, U.S.)
Most economies are mixed: aspects of market and command economies
(1:10-6:50)

8. Economic Strength of a Nation
Determined by Calculating the Wealth
Gross Domestic Product (GDP): The value of all the goods and services produced in a nation
Gross National Product (GNP): The value of all the goods and services produced in a nation plus income made from foreign investment (measures growth)
Both are used in wealth determination

9. GDP Cartogram

10. GDP Per Capita
Found by taking the GDP of the entire nation and dividing it by the total population
(GDP Per Person)
Measures standard of living (what does this mean)

11. What areas are wealthy? What areas are poor?

15. Economic Question…
What is a better measure of a countries economic strength, GDP or GDP Per Capita?

16. Supply and Demand
Supply & Demand Economic Law: As the price of a good or service increases, consumer demand for the good or service will decrease and vice versa
A consumer will purchase more pizzas if the price of pizza falls. The opposite is true if the price of pizza increases.
If supply increases and demand decreases, price will drop
If supply decreases and demand increases, price will increase
– Supply and Demand Indiana Jones
– Shifting Supply and Demand

17. Supply and Demand w/ Pizza

19. Develop a real world scenario that explains the law of supply and demand…

20. What is Voluntary Trade?
The exchange of goods or services between countries
Why might trade occur?
What are the benefits of voluntary trade between nations?

21. Trade Barriers & Trade Corridors
Trade Barrier: Anything that prevents trade from happening. Examples?
Trade Corridor: Anything that allows or helps trade happen. Examples?

22. Balance of Trade
The difference between exports and imports over a period of time
Import: Goods or services being purchased or brought into a country
For example; bananas, coffee
Export: Goods or services being sold or leaving a country
For example; cars, books, movies

23. Balance of Trade
Surplus: When a nation’s income is more than its spending; when a nation has more exports than imports
(Surplus = positive)
Deficit: When a nation spends more than it takes in; when a nation has more imports than exports
(Deficit = Negative)

24. US Balance of Trade Do you think we import or export more goods?
Does that mean we have a trade surplus or deficit?
Which is better? Why?

26. U.S. Trade

27. Who is at fault for the U. S. debt
Who is at fault for the U.S. debt? Does the US have a trade surplus or a trade deficit? What is the main factor causing US debt?

32. What is Human Capital
The knowledge or skills that people possess that contribute to the economy.
What are examples of human capital?
How could someone improve their human capital?

33. How Banks Work Why put money in a bank? Money is safe
Banks reinvest your money
You earn interest!
What happens if everyone withdraws money at once???
What gives money its value:

34. The World Bank Provides loans to developing countries
Looks to promote investment in poorer countries and international trade
Goals are to eliminate poverty and hunger
Reduce child mortality
Fight diseases such as AIDS and Malaria

35. Which of these would you rather have?

36. How do you spend dollars in another country?
You must convert your currency
World bank sets prices based on currency (economic) strength
Use currency conversion tables

37. How to Turn 100 Trillion Dollars Into Five and Feel Good About It
The Highest-Denominated Bill Ever Issued Gives Value to Worthless Zimbabwe Currency
By PATRICK MCGROARTY And FARAI MUTSAKA
A 100-trillion-dollar bill, it turns out, is worth about $5.
That's the going rate for Zimbabwe's highest denomination note, the biggest ever produced for legal tender—and a national symbol of monetary policy run amok. At one point in 2009, a hundred-trillion-dollar bill couldn't buy a bus ticket in the capital of Harare.