1. Understanding Economics
The Economic Problem

2. National Economic Goals
Question:
What are our national economic goals?

3. Suggested National Economic Goals
Low unemployment
Low inflation
Steady economic growth
Fairness
A level playing field
Equal opportunity for all

4. Unemployment rate in U.S.

5. Number of employed

6. Inflation rate in U.S.

7. Growth rate in U.S.

8. GDP of the Nations compared
Review these:
List of countries by GDP
List of countries by GDP per capita

9. The Basic Economic Questions
3 basic questions society must answer:
what to produce
how to produce it
for whom to produce it (who gets it?)
2 basic approaches to answer these Q’s:
Command economy
Market economy

10. Command Economy A small group of people at the top make the decisions.
Socialism: the government owns the factors of production. State-owned factories, farms, businesses.
Communism: all private property is confiscated and owned by the State in the name “the people”. The middle and upper classes are exterminated. In the 1900’s Marxism was responsible for the murder of more than 100 million people.

11. Command Economies (cont.)
Monarchy: The King owns everything. Any sort of private commercial enterprise requires a special “charter” from the King.
Oligarchy: A small group of families, basically, run everything from the top. All about hereditary.
Theocracy: The Mullah’s run everything.

12. Market Economy
Private individuals make the decisions which answer the 3 ‘economic questions’
What to produce – the laws of supply & demand act as a thermostat
How to produce – individual firms make decisions based on financial analysis
For whom to produce – consumers wishing to buy goods will find them available
Safety nets are established for the poor.

13. Mixed Economies Most countries have mixed economies.
In the U.S., the private sector generates $20 Trillion in GDP. The Federal Government uses $4 Trillion of this, of which roughly $3 Trillion is transfer-payments to individuals.