2. Economics 12/6/10 http://mrmilewski.com OBJECTIVE: Demonstrate mastery of Chapter #1 and begin examination of world economic systems. I. Administrative Stuff -attendance -explanation of test procedure II. Chapter#1 Test III. Journal #4 pt. A -Read “The Global Economy” p.35 -Answer questions (1-2) p.35 IV. Journal #4 pt. B -notes on economic systems

3. All societies face scarcity and must answer the 3 basic questions: What to produce? How to produce? For whom to produce? http://www.swan.ac.uk/engd/production%20line.JPG http://en.wikipedia.org/wiki/Image:Bakweri_cocoyam_farmer_from_Cameroon.jpg

4. Types of Economic Systems Traditional – tribal law Market – democratic societies Command – dictators, communist gov’t http://www.horizonsunlimited.com/forwood/images/uzbepho5.jpg

5. Types of Economic Systems

6. Goals of the American Economy Economic freedom Economic efficiency Economic equity Economic security Full employment Price stability Economic growth (Future Goals)

7. Economic freedom In the United States, people place a high value on the freedom to make their own economic decisions. –People like to choose their own occupations, employers, and uses for their money. –Business owners like the freedom to choose where and how they produce. The belief in economic freedom, like political freedom, is one of the cornerstones of American society

8. Economic efficiency Productive resources (land, labor, capital & entrepreneurs) are scarce and must be used in a way that the benefits of their use are greater than their costs.

9. Economic equity Americans have a strong sense of justice, impartiality, and fairness. Examples: -equal pay for equal work -illegal to discriminate -advertisers are not allowed to make false claims -lemon laws (hold producers responsible for faulty products )

10. Economic security Americans desire protection from such adverse economic events as layoffs and illnesses. Examples: -unemployment insurance -workman’s comp. -social security

11. Full employment When people work, they earn income for themselves while they produce goods and services for others.

12. Economics 12/7/10 http://mrmilewski.com OBJECTIVE: Examine the Goals of the American Economy. I. Journal #5 pt. A -Read “Critical Thinking Skill” p.40 -Answer questions (1-3) p.40 II. Quiz#3 III. Return of Chapter#1 Test IV. Journal #5 pt. B -finish notes on goals V. Journal#5 pt. C -questions on Econ U.S.A. episode#7

13. Price stability Price stability adds a degree of certainty to the future. If inflation–a rise in the general level of prices–occurs, workers need more money to pay for food, clothing, and shelter. How inflation works: -Wendy’s Jr. Cheese Deluxe -Cost $.99

14. If you make $5.00 How many Jr. Cheese’s can you buy per hour? 5, so your purchasing power is 5 burgers per hour Next year you get a raise of $1, is your purchasing power higher this year than it was last year or lower?

15. You can’t answer the question until you know the price of the Jr. Cheese. If the price of the Jr. Cheese goes to $1.50, what is the change in your purchasing power? Decreased by 1 burger

16. Inflation Example Year 1Year 2Year 3 Burger price 1.001.50 Your salary5.006.007.50 Your purchasing power 5 burgers4 burgers5 burgers

17. Fixed Income People who live on a fixed income–an income that does not increase even though prices go up– find that bills are harder to pay and that planning for the future is more difficult.

18. Economic growth Growth is needed so that people can have more goods and services. Because the nation’s population is likely to grow, economic growth is necessary to meet everyone’s needs.

19. Econ U.S.A. episode#7 1.) What did Kennedy do in 1963? What was the goal of it? Did it work? 2.) What happened in 1965? How did the White House make it worse? 3.) What happened when consumers and government continued to buy? 4.) How can inflation help some people? 5.) What is inflationary psychology? How did it hurt businesses? 6.) How are senior citizens affected by inflation? 7.) Why did workers go on strike? How did it effect inflation? 8.) How did President Nixon try to control inflation?Did it work? 9.) What happened to inflation by the late 1970’s?

20. Economics 12/8/10 http://mrmilewski.com OBJECTIVE: Examine the characteristics of capitalism and the Consumer Price Index. I. Journal #6 pt. A -Examine Figure 2.1 p.38 -Answer the caption question p.38 II. Quiz #4 III. Journal #6 pt. B -notes on capitalism & CPI IV. Math Practice with CPI -constructing a CPI

21. The Characteristics of Capitalism In capitalism private citizens own the factors of production. Free enterprise means that competition is allowed to flourish with minimum government interference.

22. Competition & Free Enterprise Economic freedom – -people can choose their jobs, employers, and how to spend their money. -businesses may choose what to sell and how much to charge. Voluntary exchange – -buyers and sellers freely engage in market transactions.

23. Private property rights – -people may control their possessions as they wish Profit motive – -people and organizations may improve their material well-being by making money Competition – -producers and sellers compete with each other for consumers while lowering costs. -consumers compete with each other to obtain the best products at the lowest prices.

24. Roles Entrepreneur – -organizes land, labor, and capital in order to make a profit Consumer – -determines what is made “the customer is always right”

25. Government – -protector of private property, enforcer of contracts, and definer of fairness -provider of services like defense, education, and public welfare -consumer of goods -regulator charged with preserving competition -promoter of national goals

26. CPI Consumer Price Index – an index used to measure price changes for a basket of frequently used common items. The CPI reports on price changes for 90,000 items in 364 categories from 85 geographic areas of the country and are compared to their 1982-84 base year prices. Produce Price Index – measure price changes paid by domestic consumers for their inputs and is based on a sample of about 100,000 commodities and uses 1982 as the base year.

27. CPI & PPI Higher prices for inputs normally results in higher prices for consumer. http://money.cnn.com/2005/07/14/news/economy/cpi/cpi_corecpi_july05.gif

28. Midwest urban CPI Source:  U.S. Department of Labor Bureau of Labor Statistics Base Year  1982-84=100 YearCPI 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 148.4 153.0 156.7 159.3 162.7 168.3 172.8 174.9 178.3 182.6 188.4 http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=dropmap&series_id=CUUR0200SA0,CUUS0200SA0

29. Midwest Urban CPI 1967-2005 http://data.bls.gov/PDQ/servlet/SurveyOutputServlet

30. Midwest Urban CPI 1988-2005 http://data.bls.gov/PDQ/servlet/SurveyOutputServlet

31. Economics 12/9/10 http://mrmilewski.com OBJECTIVE: Examine the effect of inflation on the economy. I. Journal #7 pt.A -Read “Profiles in Economics” p.266 -Answer question#1 p.266 II. Journal#7 pt.B -notes on ideas III. Finish Math Practice with CPI IV. The Commanding Heights -Film about Economic Systems

32. Types of Economic Systems Market – democratic societies Command – dictators, communist gov’t Traditional – tribal law Market – Capitalist (Socialist) Command - Communist

33. The Battle of Ideas The 20 th Century began with a Communist Revolution, and ended with a Capitalist Revolution. In the West the battle of ideas was between Keynes v. von Hyeck.

34. Economics 12/10/10 http://mrmilewski.com OBJECTIVE: Examine the effect of government planning on the 20 th century. I. Administrative Stuff -attendance -test reminders II. Commanding Heights -questions on film about globalization III. Mindjogger -video quiz on Chapter#2