1. Economics- Money Matters

2. Economics 1.A social science- deals with production of goods and services 2.With limited or scarce resources 3.For consumption now and into the future

3. Factors of Production 1.Land- natural resources 2.Labor- people 3.Capital- machinery/technology 4.Entrepreneurship- profit

5. Cost Cost- what someone gives up to get something else Cost is subjective- what is in your mind when you make a decision There is no value in a good without subjectivity

6. Opportunity Cost- what did you give up to do something? –Time, opportunity, relationships

7. Currency Rates Increase in U.S demand for Japanese goods will increase the demand for yen and raise the dollar price of yen When the dollar price of yen increases, the dollar has depreciated=Japanese goods more expensive

8. New Economy Technology advances wealthy countries and raises global competition Negative side- Takes fewer workers to produce the same quality of output

9. Law of Scarcity Problem 1.Unlimited wants and needs 2.Limited/Scarce resources Law of scarcity applies Economics is concerned with doing the best with what we have

10. How a society runs an economy 1.Adam Smith Laizze-Faire- no government involvement in economics Capitalism- businesses set the tone, hire more people and spend money Need entrepreneurs to kick start this Lasted from 1776-1929

11. How to Save Smart 1.$1000 Emergency Fund 2.Pay off all debt except a house 3.3-6 Months expenses in savings 4.Invest 15% of your money into ROTH IRA plans 5.Pay off your home 6.Build Wealth

12. Bargains The key to opening the door to huge bargains is to negotiate everything –Everything is negotiable at some point To get a deal, make sure you know more than the other person

13. 6 Rules of Negotiating 1.Always tell the truth 2.Use the power of cash It is emotional It is visual It has immediacy

14. 6 Rules of Negotiating 3.Use Walk Away Power 4.Shut Up! 5.“That’s not good enough” 6.“If I take away” Technique

15. Where to Find Deals Flea Markets Ebay Conventions Individuals Public Auctions Coupons Garage Sales

16. Comparative Advantage What happens when you produce too much? Answer: Trade (The best way to have economic growth) Downside to trading- dependency Biggest U.S trading partner- Canada

17. Global Competition U.S accounts for 13% of all trade worldwide Major export- Chemicals (and people) Major Import- Oil

18. Global Competition Major world traders 1.U.S, Japan and Germany- 2.9 Trillion in exports 2.Middle East- Oil 3.Asian Tigers- China, India

19. Global Competition Nations trading together will be using their scare resources more effectively Free trade 1.Promotes Competition 2.May lower prices 3.More goods available 4.Improve product quality

20. Global Competition Definition: The integration of industry, commerce, communication, travel and culture among countries

21. Global Competition Pros 1.Increased trade=more competition on U.S Businesses 2.Lower production costs=cheaper products Cons 1.If you cannot lower production costs=lose market share/employment 2.Outsourcing

22. How to Invest The key to investments is interest rates You want your money to make money for you The higher the possible interest rate, the greater the risk

23. Investment Options 1.Money Markets (C.D)- Get from banks Very low risk with check writing privileges Great for emergency savings

24. Investment Options 2.Single Stocks Very high risk When you buy stock, you are buying a small piece of ownership in the company Your return comes as the company increases in value or pays you some of its profits

25. Investment Options 3.Bonds A bond is a debt instruments by which the company pays you money. Your return is based on changing interest rates= BAD IDEA

26. Investment Options 4.Mutual Funds- Investors pool their money to invest Portfolio managers manage the pool or fund Your return comes as the value of the fund is increased Great long term options