1. Topic: Economics and the Great Depression Essential Question: What are the basic principles of economics?

2.  Capitalism  Also called a market economy or a free-enterprise system  Adam Smith of Scotland  Father of capitalism  Three natural laws of economics:  Law of self-interest

3.  Three natural laws of economics:  Law of self-interest  Law of supply and demand  Supply  The amount of a good that businesses are willing to offer for sale  Demand  The amount of a good that people are willing and able to buy

4.  Demand  The amount of a good that people are willing and able to buy  Law of competition

5.  The amount of a good that people are willing and able to buy  Law of competition  Role of government:  Laissez-faire  Government should not interfere with business  Government should  Protect property rights  Enforce contracts  Allow free trade

6.  Discuss  Adam Smith  Self-interest  Supply and demand  Competition  Role of government  Write a sentence describing how one of the following affects prices:  Supply and demand  Competition  Enforce contracts  Allow free trade

7.  Enforce contracts  Allow free trade  Other important principles:  Scarcity  Exists because of unlimited human wants and needs in a world with limited resources

8.  Scarcity  Exists because of unlimited human wants and needs in a world with limited resources  Opportunity cost  Exists because of scarcity  What you give up for your economic choices

9.  Exists because of scarcity  What you give up for your economic choices  Financial Planning  Credit  Allows you to buy now and pay later  Problems with using credit:  Debt  Interest

10.  Debt  Interest  Some types of credit:  Credit card  Auto loan  Mortgage  Student loan

11. MMortgage SStudent loan IInvestment PPutting up money in the hope of gaining a profit later SSome types of personal investments: SSavings account

12.  Some types of personal investments:  Savings account  Stocks  Shares of ownership in a company  Mutual funds  Spread investments across many companies  Example of diversification

13.  Discuss  Scarcity  Opportunity cost  Credit  Investment  Write a sentence describing an example of an opportunity cost  Spread investments across many companies  Example of diversification

14.  Spread investments across many companies  Example of diversification  The Great Depression (1929-1939)  Causes:  Natural business cycles

15. CCauses: NNatural business cycles HHigh tariffs reduced international trade BBad investments LLed to Black Tuesday: the stock market crash

16.  Bad investments  Led to Black Tuesday: the stock market crash  The Dust Bowl (1930-1936)  Severe dust storms on the prairies

17. TThe Dust Bowl (1930-1936) SSevere dust storms on the prairies RResponses to the Depression PPresident Herbert Hoover LLaissez-faire HHomeless moved to “Hoovervilles”

18.  Laissez-faire  Homeless moved to “Hoovervilles”  President Franklin D. Roosevelt  The New Deal  Three goals (the three Rs):  Relief  Recovery  Reform

19.  Recovery  Reform  Sometimes called “Alphabet Soup”

20.  Reform  Sometimes called “Alphabet Soup”  The Depression ended because of World War II

21.  Discuss  Causes of the Great Depression  Responses to the Great Depression  Write a sentence comparing/contrasting Hoover’s and FDR’s responses to the Great Depression  Sometimes called “Alphabet Soup”  The Depression ended because of World War II