2. Economics Analysis of the choices people and governments make in allocating scarce resources Microeconomics Study of small economic units, such as individual consumers, families, and businesses Macroeconomics Study of a country’s overall economic issues

3. Microeconomics: The Forces of Demand and Supply Demand Willingness and ability of consumers to purchase goods and services at different prices Supply Amount of goods and services for sale at different prices

4. Factors Driving Demand Demand curve Factors Driving Supply Supply curve How Demand and Supply Interact Equilibrium price Buyers and sellers tend to make choices that restore the equilibrium price.

5. MACROECONOMICS: ISSUES FOR THE ENTIRE SOCIETY Political, social, and legal environments differ from country to country. Three types of economies Private enterprise systems Planned economies Mixed market systems

6. EVALUATING ECONOMIC PERFORMANCE Economic system should provide stable business environment and sustained growth. Flattening the Business Cycle Stages: Prosperity Recession Depression Recovery

7. Productivity and the Nation’s Gross Domestic Product Productivity Gross Domestic Product (GDP) Tracked by the Bureau of Economic Analysis

8. Price-Level Changes Inflation Devalues money Steady prices benefit the overall economy Businesses can make long-range plans and investments. Consumers can purchase more products, particularly major purchases. Deflation Measuring Price Level Changes Consumer Price Index

9. Employment Levels

10. MANAGING THE ECONOMY’S PERFORMANCE Government uses monetary and fiscal policy to fight unemployment, increase spending, and reduce the duration and severity of economic recession. Monetary Policy Fiscal Policy Budget Budget deficit National debt Budget surplus Balanced budget

11. GLOBAL ECONOMIC CHALLENGES OF THE 21ST CENTURY International terrorism Shift to a global information economy Aging of the world’s population Improving quality and customer service Enhancing competitiveness of every country’s workforce