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Economy

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Economy Powered By Docstoc
					What is Economics?
ECONOMICS


IS THE SCIENCE OF THE
 PRODUCTION AND
 DISTRIBUTION OF
 WEALTH.
 ECONOMICS

IS A SYSTEM THAT
  INCLUDES ALL OF THE
  ACTIVITIES THAT PEOPLE
  AND BUSINESSES DO TO
  EARN A LIVING.
Economy
3 questions
    4 types
              Questions

What should we produce?

How should we produce the product?

For whom, should we produce the
 product?
              Four Types
Traditional, market, command,
                     and mixed
Traditional
 Individual produces
  most of what a family
  needs to survive.
 Production &
  distribution ?’s are
  answered by looking
  at the past
Underdeveloped Nation
     A poor nation whose main
economic activity is subsistence
                         farming
             Caste System
System of rigid social classes in
which people’s castes determine
        what jobs they can have
Command
           Government controls
            what goods are
            produced, how they
            are produced, and
            what they cost
           Production &
            distribution ?’s
            answered by central
            planners
       Developing Nation
A nation whose economic base is
 changing from farms to factories
Market
 Production &
  distribution ?’s
  answered by prices &
  profits
 Businesses produce
  & sell goods for $ /
  what consumer needs
 People earn what
  they think they need
                          Capitalism
      Economic system in which resources &
  means of production are privately owned &
prices, production & distribution of goods are
  determined mainly by competition in a free
                                       market.
         Developed Nation
        A rich nation whose main
economic activity is manufacturing
             & providing services
              democracy

a form of government in which
people elect leaders & rule by
                      majority
Mixed
         Individuals make
          some economic
          decisions &
          government makes
          some decisions
                  Socialism
An economic system in which the
  government owns resources &
          controls the economy
       Standard of Living
The level of people’s needs & wants
  fulfilled by a society, increases as
                productivity increases
     Government & Economy

GDP: gross domestic product /
 the total value of goods &
 services produced in a country
 during a year
Gross Domestic Product
(GDP) is related to changes in
economic factors, such as
employment.
GDP does not directly measure
education, health, life
expectancy, leisure, protection
from crime or environmental
protection, but only the amounts
of money that are spent with
regard to these goals.
•A country’s Gross Domestic Product can
show if the economy is growing or
shrinking.

•It is a standard by which the economy as a
whole can be judged.

•It can be used to compare one economy
with another.

•It can also be used to compare an
economy with itself over time.
Trade Conti…

Specialization: concentrating on 1 area of
 work
Import: good or material for trade or sale
 brought into a country form somewhere
 else
Export: good or material sold or traded to
 another country
Trade Restrictions

Embargo: decision by 1 country to
 eliminate all exports to & imports from
 another country
Tariff: a tax on imported goods
Quota: trade restriction that limits the
 amount of a good that can be imported
                  1)
Look at the
 pictures on
                  2)
 the right.
 Which of
 these pictures   3)
 show goods
 and which        4)
 ones show
 services?
 There was a
  scarcity of cones    1)
  at Bubba’s.
  Scarcity means
  that there are
  limited resources,
  and therefore,       2)
  people must
  make choices.
  Look at the
  pictures on the
                       3)
  right. Which
  pictures show a
  scarcity?
Scarcity in        Underdeveloped
Nations
Not enough farmland, water, and food
Lack of medical personnel, supplies, and
 facilities
Lack of transportation for goods
Lack of building materials
Lack of employment
Lack of capital for investment
Lack of education
What is opportunity cost?
Andy had $65.00 Sara had enough
 to spend at the    money for either
 toy store. The     the rabbit or the
 basketball net     bike. She decided
 cost $50.00, so    to buy the bike
 he had to buy that because then she
 instead of the     could ride bikes
 skateboard, which with her friends
 cost $75.00.       after school.
Opportunity    Opportunity cost is
  Costs         the process of
                choosing one good
                or service over
                another. The item
                that you don’t pick is
                the opportunity
 Purchases      cost. The rabbit is
                Sara’s opportunity
                cost and the
                skateboard is
                Andy’s opportunity
                cost.

				
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