1. Warm Up – On the board Happy Monday! (17 more instructional days!)

2. Welcome to Beadville A simulation of Economic Systems

3. Types of Economies

4. Types of Economic Systems Types of Economic Systems Traditional Command Market Mixed

5. Traditional Economy What did you Produce? ◦ Determined by tradition, ancestors, customs

6. How did you Produce it? ◦ Produce the same way its always been done; NO SPECIALIZATION ◦ For Whom did you Produce?  Produce for tribe, village, local community Examples: ◦ Ex. Native American, Aborigines, Amish

7. Command Economy What did you Produce? ◦ Determined by the government or central planner

8. How did you Produce it? ◦ Told how to by central planner; SPECIALIZATION For Whom did you Produce? ◦ The gov’t or central planner Ex. China, N. Korea, USSR

9. Market Economy What did you Produce? ◦ Determined by whatever would make the most profit

10. How did you Produce it? ◦ The way that made the most profit; SPECIALIZATION For Whom did you Produce? ◦ Consumers, people interested in product Ex. UNITED STATES!

11. Adam Smith & Karl Marx & Keynes Three men who shaped modern Economics

12. Vocabulary Capitalism: form of economy where production is controlled by citizens not gov’t Free enterprise/market: an economy where there is little or no government interference Invisible hand: Adam Smith’s term for the force that controls the economy Communism: a form of economy where the government controls all economic decisions.

13. Patent: a temporary government protection on an invention (design). Copyright: a permanent government protection on an idea.

14. Adam Smith Father of ECONOMICS Book: The Wealth of Nations Economic Theory: “Laissez-Faire”-Gov’t should not interfere with economy The “Invisible hand” will set the prices and quantity Competition & profit is good! Economic Goal: ECONOMIC FREEDOM

15. Karl Marx Father of Communism Book: Communist Manifesto Economic Theory: Capitalism leads to the rich getting richer because they cheat the workers. Wealth should be spread among ALL equally. Government needs to control the economy. Economic Goal: ECONOMIC EQUALITY

16. John Keynes Father of Keynesian Theory (Fiscal Policy) Book: N/A Economic Theory: In times of economic trouble, Government should step in. (Fiscal Policy) By spending money, government can solve a recession Economic Goal: ECONOMIC GROWTH & STABILITY

18. #3: How is Keynesian theory a “mixed economy?” Keynes believed that the government should stay out of the economy (market) unless there is a problem. If so the government should step in to fix it (command).

19. Benefits of Competition in a Market Economy Competition creates… cheaper prices better quality greater variety

20. DISCUSS: If competition is good, and patents & copyrights limit competition, why does the government allow them? Patents & copyrights protect the entrepreneur and promote the invention of new technologies and ideas.

21. Circular Flow

22. Shows the interactions between households and businesses in the free market

23. Circular Flow

24. Households A household is a person or group of people living in the same residence. Households own the factors of production Households are also the consumers of goods and services

25. Firms a business, or firm, is an organization that uses resources to produce a product, which it then sells. Firms transform “inputs,” or factors of production, into “outputs,” or products

26. Factor Market Households supply firms with land, labor, and capital Firms pay households for land, labor, and capital

27. Product Market Households pay firms for goods and services Firms supply households with goods and services

28. Think, Pair, Share Instructions: On a separate sheet of paper! Pretend you are a $100 dollar bill. After viewing the different circular flow models, determine 10 different ways you could be used.

29. Circular Flow

32. Globalization

33. Objective Explain the basic concepts of trade Summarize how nations specialize and become interdependent through trade Explain the impact of government policies on international trade.

34. Vocabulary Migration-big groups of people moving from one place to another. Comparative Advantage – the ability of a country to produce a good at a lower opportunity cost than another country can. Globalization- people and countries working together despite barriers. Unfavorable balance of trade- When a nation imports more than it exports.

35. Vocabulary Favorable Balance of Trade - When a country exports (sells goods) more than it imports (buys goods)

36. Vocabulary Tariff- A tax on an imported good Quota- A limit on the amount of imported goods **These protect domestic businesses!** Embargo- when a group of nations refuse to trade with a selected country

37. Vocabulary Out-sourcing- when companies move jobs from one place to another to cut costs.

38. Vocabulary Dividends- money stockholders periodically get from improving stocks. Capital gains/loss- the money stockholder make or lose when they sell their stocks. Deregulation- when the government lifts restrictions on businesses

39. Protectionism A policy of trade restrictions to help domestic businesses Examples ◦ Tariff ◦ Quota ◦ Embargos

40. Impact protectionist policies Embargos, tariffs & quotas create barriers to international trade and globalization.

41. Global Organizations NAFTA Ended trade restrictions between Mexico, U.S. & Canada WTO Oversees international trade and trade rules

42. Global Organizations EU Ended trade barriers between most European nations IMF Helps build the economy of poor/ developing nations

43. Global Organizations World Bank Provides financial assistance to developing nations United Nations Maintain international peace and cooperation

44. Impact of NAFTA Created an unfavorable balance of trade in the U.S.

46. Economic Indicators GDP- All that is produced within a country in one year. Per Capita GDP- how much every person on average produced GDP/population=per capita GDP

48. Economic Indicators CPI- measures inflation/deflation rates. Unemployment rate- percentage of people without a job

49. Stock Market: Overall value of company stocks.

50. Rust/Frost Belt- people are leaving this area Sun Belt- people moving to this area for jobs Silicon Valley- center of technology research Research Triangle- research center with many colleges

51. Declining textile and furniture Companies have out-sourced jobs to China and Mexico and downsized (shrunk).

52. Some “stuff” we wanted to mention Monopolies in the US are illegal ◦ UNLESS the gov’t allows & regulates them GDP & per capita GDP ◦ Undeveloped countries have low per captia GDP ◦ Developed countries have high per capita GDP Tax breaks ◦ Use by federal and state gov’ts to lure new business in an area

53. Some “stuff” we wanted to mention Income-money people make ◦ Disposable: extra income used for wants (vacation, movie tickets, eating out) ◦ Discretionary: income used to pay necessities (i.e. food, electric bills, mortgage) Exchange Rate: the price of one nation’s currency compare to another's ◦ 1USD =.75 EURO ◦ Allows tourists to change forms of money when traveling around the world

54. World Trade Organization Do World Trade Organizations harm the enviornment?

55. World Trade Organization Background Information What is globalization? The term globalization refers to the integration of economies, cultures, and government policies around the world. This integration is nothing new. From the earliest small tribal groups to large modern nation- states, trade and investment between peoples has characterized the world's economy for centuries.

56. How is pop culture an example of globalization? Popular culture is a good example of globalization. The Internet, along with international media outlets such as MTV and CNN, have sped the globalization of popular culture. Teenagers around the world can watch the same videos, listen to the same music, and wear the same clothing styles. Television audiences around the world can experience the same major news and sporting events. These shared experiences can help foster a sense of global community.

57. How does globalization affect the world's economy? Large companies can organize production on a worldwide scale. Each step in the manufacturing process is carried out in the most advantageous geographic location.

58. For Example…

59. So what's the problem? As globalization proceeds, forces beyond the control of national governments can affect the economic welfare of individual people. For example, an economic crisis in Asia could cause job layoffs in Eastern Europe. Or, workers in one country might lose their jobs when a multinational corporation moves its operations to a country where workers are paid less. Some critics of globalization worry that individual nations have lost control of their own economies. Institutions designed to foster global economic growth and trade, such as the World Trade Organization and the World Bank, have become targets of criticism and protest. Some people believe that these organizations are too powerful and make decisions that have harmful effects on individuals and the environment. To some, global free trade is just an excuse to increase the wealth and power of multinational corporations.