1. Unit 5

2. I. Early Economic Systems A. Thousands of years ago….. 1. People lived in nomadic groups 2. They depended on hunting and gathering for their needs B. Development of Agriculture…. 1. Humans learned to plant and harvest food 2. Groups began to remain in one place 3. This change in lifestyle meant it was time for new things 4. Groups of people slowly developed into villages then towns and cities. 5. The main difficulty was protection.

3. II. Feudalism A. A system in which a lord gave protection to the people who worked for him 1. The people gave loyalty and economic support to the lord. 2. Workers were called serfs. B. Duties were divided among the people 1. Farmers 2. Weapon makers 3. Soldiers C. When the lord died, the son received the lord’s land and serfs. D. This system of protection continued for many centuries.

4. III. Development of Guilds A. Feudalism was weakened as people moved to towns and cities. B. Trade caused the towns and cities to grow. C. Two Types of Guilds Developed: 1. Merchant Guild- determined the types and prices of goods to be sold 2. Craft Guild- guilds for specific trades that helped control quality. This was at the END of the Middle Ages

5. IV. Other Early Economic Systems A. Domestic System- workers produced goods in their homes. B. Factory System- goods were produced in rented or owned buildings

6. V. Mercantilism A. Idea that a country could become strong if it stored up a great deal of wealth. B. Government took strict control of collection of taxes. C. Made sure exports were greater than imports D. Wanted the country to have a large population Colonies existed to make money for the mother country!

7. VI. Free Enterprise A. The individuals, not the government, makes the economics decision. B. Each person has the right to make his or her own choice.

8. Unit 5

9. Early Economic Systems The first kind of economic system was developed during the Paleolithic Era Hunters and Gatherers In many cases were nomadic- moved around following herds of animals and producing plants to hunt and gather. During the Neolithic Era people began to settle down and stay in one place Caused by the Development of Agriculture Helped people farm making it possible to grow own food in certain months of the year

10. Economics The study of how individuals and nations make choices about ways to use scarce resources to fulfill their needs and wants

11. Economics Due to the history of buying and selling goods there must be a medium of exchange What does that mean? MONEY The medium of exchange we use in the United States is money.

12. Economics In economics you must have a plan for making and spending money. What is this called? BUDGET

13. Economics There are several different types of economic systems: Capitalism Socialism Communism Free Enterprise/Free Market All were described in the vocabulary section. Are there any questions?

14. Economics Involves spending money Expenditures Money that government or people spend

15. Economic Planning Year 12 month period Fiscal Year Prior to the new fiscal year government officials spend numerous hours planning how money will be spent and made during the new year

16. Gross Domestic Product ( ( GDP ) Total dollar value of all final goods and services produced in a country per year Measured in Dollars Measure of a country’s overall economic output Positively correlated with standard of living Very big part of economics!

17. Gross Domestic Product ( ( GDP ) Why is it important? IF GDP goes up each year, the economy is expanding If GDP goes down the economy is in trouble It is a measure of our standard of living Does NOT Show- Quality of goods produced Overall well-being of society (crime, opportunity available, etc.)

18. Gross Domestic Product ( ( GDP ) If GDP of a country goes up that means….. The economy is IMPROVING If GDP of a country goes down that means…… The economy is DECLINING GDP is NOT a measure of the quality of goods produced in a country Quantity of goods produced and sold

19. Gross Domestic Product ( ( GDP )

21. Economics People require certain goods to live on Our requirements for civilization are our NEEDS We must have these to survive! In Economics, sometimes we do not have enough resources to meet our needs. This is called SCARCITY Economics is the study of scarcity

22. Economics On the other side, people have things they would like to have but do not need These are our WANTS We have unlimited wants!! Wants are things we can live without but in many cases do keep the economy going.

23. Resource:- Land A. Most Countries have a large supply of natural resources 1. Water 2. Forests 3. Good Soil 4. Coal B. Some resources must be bought from other countries 1. Oil 2. Minerals

24. Resource:- Land A. Natural Resources are non renewable Once they are all gone, they are gone forever B. Water can be polluted It is then difficult and expensive to clean

25. Resource:- Labor A. The work humans do B. Labor needs of the producers of goods and services in America is always changing.

26. Resource:- Capital A. These are the actual items needed for production B. Includes anything the business needs to produce goods C. Examples: tools, machinery, factories, money, etc.

27. Supply and Demand 1. Supply: degree of availability of an item The number of items ready to sell 2. Demand: the usability of the item or how many people want to buy it 3. If supply is GREATER than demand there is a SURPLUS. Usually causes price of the item to go down. 4. If demand is GREATER than supply there is a SCARCITY. Usually causes price of the item to go up.

28. Supply and Demand 1. Supply: what is for sale 2. Demand: who wants to buy it 3. Law of Supply As the price increases, the supply increases. This means more sellers, yet fewer buyers. 4. Law of Demand As the price decreases, the demand increases. This means more buyers, yet fewer sellers.