Post on 29-Dec-2015
transcript
Bell Starter(Section 1)
Bell Starter(Section 1)
Key TermsKey Terms
GoodsServicesFactors of
productionNatural
resourcesLabor
GoodsServicesFactors of
productionNatural
resourcesLabor
Key TermsKey Terms
CapitalEntrepreneurGross Domestic
Product (GDP)Standard of
living
CapitalEntrepreneurGross Domestic
Product (GDP)Standard of
living
ECONOMIC RESOURCESECONOMIC RESOURCES
PRODUCTION OUTPUT OF U.S. AT BEGINNING OF 21ST
CENTURY AT 10 TRILLION (30%) OF WORLD’S OUTPUT
PRODUCTION OUTPUT OF U.S. AT BEGINNING OF 21ST
CENTURY AT 10 TRILLION (30%) OF WORLD’S OUTPUT
PRODUCTIONPRODUCTION
COMES IN THE FORM OF GOODS AND SERVICESGOOD:
BOOKS , CARS
SERVICES:HAIRCUTS, HOME REPAIRS, CONCERTS
TO MAKE GOODS AND SERVICES YOU MUST HAVE THE FOUR FACTORS OF PRODUCTION
COMES IN THE FORM OF GOODS AND SERVICESGOOD:
BOOKS , CARS
SERVICES:HAIRCUTS, HOME REPAIRS, CONCERTS
TO MAKE GOODS AND SERVICES YOU MUST HAVE THE FOUR FACTORS OF PRODUCTION
FOUR FACTORS OF PRODUCTION
FOUR FACTORS OF PRODUCTION
NATURAL RESOURCESCOMES FROM NATURE
FERTILE FIELDS, RAINFALL, FOREST, MINERAL DEPOSITS
SCHOOLS—BUILT ON/WITH NATURAL RESOUCES
HUMAN RESOURCES (LABOR)PHSYCIAL AND MENTAL WORK
CAPITAL RESOURCESCAPITAL GOODS:
UNIQUE BECAUSE THEY GO INTO MAKING ANOTHER PRODUCT AND ARE NOT COUNTED IN GDP
TOOLS, MACHINERY
ENTREPRENEURAL SKILLSNEW BUSINESSES, INTRODUCE NEW PRODUCTS
NATURAL RESOURCESCOMES FROM NATURE
FERTILE FIELDS, RAINFALL, FOREST, MINERAL DEPOSITS
SCHOOLS—BUILT ON/WITH NATURAL RESOUCES
HUMAN RESOURCES (LABOR)PHSYCIAL AND MENTAL WORK
CAPITAL RESOURCESCAPITAL GOODS:
UNIQUE BECAUSE THEY GO INTO MAKING ANOTHER PRODUCT AND ARE NOT COUNTED IN GDP
TOOLS, MACHINERY
ENTREPRENEURAL SKILLSNEW BUSINESSES, INTRODUCE NEW PRODUCTS
FACTORY OF PRODUCTIONACTIVITY
FACTORY OF PRODUCTIONACTIVITY
Natural Resources
Human Resources
Capital Goods Entrepreneur
Gift of Nature
Electricians
Machinery
New Model of Car
GDPGDPGROSS DOMESTIC PRODUCT
TOTAL DOLLAR VALUE OF ALL FINAL GOODS AND SERVICES PRODUCED IN A COUNTRY EACH YEAR
Loaf of bread—sold to its userGoods that’s go into making-not countedSales of used goods—not counted
THIS IS HOW WE DETERMINE WHERE WE ARE IN THE BUSINESS CYCLE
2 QUARTERS OF GDP GOING DOWN2 QUARTERS OF GDP GOING UP
GROSS DOMESTIC PRODUCTTOTAL DOLLAR VALUE OF ALL FINAL
GOODS AND SERVICES PRODUCED IN A COUNTRY EACH YEAR
Loaf of bread—sold to its userGoods that’s go into making-not countedSales of used goods—not counted
THIS IS HOW WE DETERMINE WHERE WE ARE IN THE BUSINESS CYCLE
2 QUARTERS OF GDP GOING DOWN2 QUARTERS OF GDP GOING UP
CALCULATING THE GDPCALCULATING THE GDP
NUMBER OF ALL FINAL GOODS AND SERVICES PRODUCED IN USA IN ONE YEAR
NUMBER OF EACH THAT ARE PRODUCED
LIST OF PRICES FOR EACH GOOD AND SERVICE PRODUCED
NUMBER OF ALL FINAL GOODS AND SERVICES PRODUCED IN USA IN ONE YEAR
NUMBER OF EACH THAT ARE PRODUCED
LIST OF PRICES FOR EACH GOOD AND SERVICE PRODUCED
CALCULATING THE GDPCALCULATING THE GDP
GDP = QUANTITY X PRICE AVERAGE OF EACH ITEM THEN ADD ALL TOGETHER
5 CARS AT 25000 (5 X 25000) =4 BOATS AT 30000 (4 X 30000) =10 MOTORCYCYES AT 500
(10X500)=
GDP = QUANTITY X PRICE AVERAGE OF EACH ITEM THEN ADD ALL TOGETHER
5 CARS AT 25000 (5 X 25000) =4 BOATS AT 30000 (4 X 30000) =10 MOTORCYCYES AT 500
(10X500)=
COMPUTING GDPCOMPUTING GDPFinal Goods
And ServicesQuantity
(in thousands)
AveragePrice
Value(in millions)
Goods: Automobiles Books Computers----------------------- Zippers
6,00015,000
1,300________
1,000
$28,00025
1,700_________
2
$168,000375
2,210_________
2
Services: Advertising (minutes of) Babysitting (hours of) Car Washes (number of)__________ Zodiac Readings (number of)
1,050,00050,00015,000
_________400
$1,0005
10_______
10
$1,050,000250150
_________4
Gross Domestic Product: $10.2 trillion
Bell Starter(Section 2)
Bell Starter(Section 2)
Factor MarketProduct MarketProductivitySpecializationDivision of laborEconomic
interdependence
Factor MarketProduct MarketProductivitySpecializationDivision of laborEconomic
interdependence
Workers earn wages Factor or Product Market
Banks earn interest Factor or Product Market
Music stores sells CDs Factor or Product Market
Landowners receive rent Factor or Product Market
Workers earn wages Factor or Product Market
Banks earn interest Factor or Product Market
Music stores sells CDs Factor or Product Market
Landowners receive rent Factor or Product Market
ECONOMIC ACTIVITY & PRODUCTIVITY
ECONOMIC ACTIVITY & PRODUCTIVITY
CIRCULAR FLOW OF THE ECONOMY IS HOW PRODUCTS FLOW FROM ONE MARKET TO
ANOTHER
CIRCULAR FLOW OF THE ECONOMY IS HOW PRODUCTS FLOW FROM ONE MARKET TO
ANOTHER
CIRCULAR FLOW CIRCULAR FLOW
MARKET ALLOWS BUYERS AND SELLERS TO EXCHANGE ECONOMIC PRODUCTS
LOCAL, REGIONAL, NATIONAL, GOLBAL
MARKET ALLOWS BUYERS AND SELLERS TO EXCHANGE ECONOMIC PRODUCTS
LOCAL, REGIONAL, NATIONAL, GOLBAL
SECTOR ONE: THE CONSUMER
SECTOR ONE: THE CONSUMER
COSUMERS, BUSINESSES, GOVERNMENT AND FOREIGN SECTOR
EARN INCOME IN FACTOR MARKET (PLACE WHERE PRODUCTIVE RESOURCES ARE BOUGHT & SOLD
WORKERS: EARN WAGES, SALERIES, & BENEFITSLANDOWNERS: EARN RENTCAPITAL INVESTORS EARN INTEREST
COSUMERS, BUSINESSES, GOVERNMENT AND FOREIGN SECTOR
EARN INCOME IN FACTOR MARKET (PLACE WHERE PRODUCTIVE RESOURCES ARE BOUGHT & SOLD
WORKERS: EARN WAGES, SALERIES, & BENEFITSLANDOWNERS: EARN RENTCAPITAL INVESTORS EARN INTEREST
SECTOR TWO: THE BUSINESS
SECTOR TWO: THE BUSINESS
INDIVIDUALS RECEIVE THEIR INCOMES FROM THE FACTOR MARKET. THEY WILL SPEND $ (INCOMES) IN
THE PRODUCT MARKETS. (WHERE PRODUCERS OFFER GOODS & SERVICES FOR SALE
BUSINESS PURCHASE SOME OF ITS OWN OUTPUTS LIKE CAPITAL GOODS (COMPUTER)
INDIVIDUALS RECEIVE THEIR INCOMES FROM THE FACTOR MARKET. THEY WILL SPEND $ (INCOMES) IN
THE PRODUCT MARKETS. (WHERE PRODUCERS OFFER GOODS & SERVICES FOR SALE
BUSINESS PURCHASE SOME OF ITS OWN OUTPUTS LIKE CAPITAL GOODS (COMPUTER)
SECTOR THREE: GOVERNMENTSECTOR THREE: GOVERNMENT
ALL LEVELS (LOCAL, STATE, NATIONAL) PARTICIPATE IN MARKETS.SALES OF SERVICES ARE GOVERNMENT
REVENUES BUT THEY ALWAYS NEED MORE SO THEY DO OTHER THINGS
TAXATIONPUBLIC UNIVERSITIES: TUITIONCITY BUSES: FARES
ALL LEVELS (LOCAL, STATE, NATIONAL) PARTICIPATE IN MARKETS.SALES OF SERVICES ARE GOVERNMENT
REVENUES BUT THEY ALWAYS NEED MORE SO THEY DO OTHER THINGS
TAXATIONPUBLIC UNIVERSITIES: TUITIONCITY BUSES: FARES
GOVERNMENTGOVERNMENT
GOVERNMENT PURCHASES IN PRODUCT MARKET TO BUY THINGS LIKE:
PURCHASE OF BOOKS, BUSES, SHIPS, PLANES
GOVERNMENT PURCHASES IN FACTOR MARKET TO BUY THINGS LIKE:
RECEIVES REVENUE FROM THE SERVICES SOLDPUBLIC UNIVERSITIES CHARGE TUTIONPUBLIC HOSPITALS CHARGES FEES
GOVERNMENT PURCHASES IN PRODUCT MARKET TO BUY THINGS LIKE:
PURCHASE OF BOOKS, BUSES, SHIPS, PLANES
GOVERNMENT PURCHASES IN FACTOR MARKET TO BUY THINGS LIKE:
RECEIVES REVENUE FROM THE SERVICES SOLDPUBLIC UNIVERSITIES CHARGE TUTIONPUBLIC HOSPITALS CHARGES FEES
SECTOR FOUR: FOREIGN SECTOR
SECTOR FOUR: FOREIGN SECTOR
ALL OTHER COUNTRIES IN THIS WORLD
LINE WITH ARROW AT BOTH ENDS B/C WE SELL AND BUY PRODUCTS FROM OTHER COUNTRIES. OFFSETS EACH OTHER
ALL OTHER COUNTRIES IN THIS WORLD
LINE WITH ARROW AT BOTH ENDS B/C WE SELL AND BUY PRODUCTS FROM OTHER COUNTRIES. OFFSETS EACH OTHER
PRODUCTIVITY & ECONOMIC GROWTHPRODUCTIVITY & ECONOMIC GROWTH
PRODUCTIVITY MEASURE OF THE AMOUNT OF OUTPUT
PRODUCED BY A GIVEN AMOUNT OF INPUTS IN A SPECIFIC PERIOD OF TIMELABOR TERMS: BUT APPLIES TO ALL
FACTORS OF PRODUCTIONHELPS TO SPECIALIZE: WHICH LEAD TO
FOREIGN TRADE
PRODUCTIVITY MEASURE OF THE AMOUNT OF OUTPUT
PRODUCED BY A GIVEN AMOUNT OF INPUTS IN A SPECIFIC PERIOD OF TIMELABOR TERMS: BUT APPLIES TO ALL
FACTORS OF PRODUCTIONHELPS TO SPECIALIZE: WHICH LEAD TO
FOREIGN TRADE
WHY NATIONS TRADE?WHY NATIONS TRADE?
1. SPECIALIZATIONGOODS AND SERVICES YOU CAN
PRODUCE BETTER THAN ANYONE ELSE 2. COMPARATIVE ADVANTAGES
HIGHER WAGES, BETTER JOBS 3. TRADE CREATES JOBS AND MARKETS
DIVISION OF LABOR 4. ECONOMIC INTERDEPENDENCE
WE RELY ON EACH OTHER FOR GOODS AND SERVICE
1. SPECIALIZATIONGOODS AND SERVICES YOU CAN
PRODUCE BETTER THAN ANYONE ELSE 2. COMPARATIVE ADVANTAGES
HIGHER WAGES, BETTER JOBS 3. TRADE CREATES JOBS AND MARKETS
DIVISION OF LABOR 4. ECONOMIC INTERDEPENDENCE
WE RELY ON EACH OTHER FOR GOODS AND SERVICE
BELL STARTER(Section 3)
BELL STARTER(Section 3)
CAPITALISMFREE ENTERPRISECOMSUMER SOVEREIGNTYPRIVATE PROPERTY RIGHTSCOMPETITIONPROFITPROFIT MOTIVEVOLUNTARY EXCHANGE
CAPITALISMFREE ENTERPRISECOMSUMER SOVEREIGNTYPRIVATE PROPERTY RIGHTSCOMPETITIONPROFITPROFIT MOTIVEVOLUNTARY EXCHANGE
CAPITALISM & FREE ENTERPRISECAPITALISM & FREE ENTERPRISE
MARKET ECONOMY
MARKET ECONOMY
CAPITALISMCAPITALISM
ECONOMIC SYSTEM IN WHICH PRIVATE CITIZENS OWN AND USE FACTORS OF PRODUCTION FOR THEIR OWN PROFIT
ECONOMIC SYSTEM IN WHICH PRIVATE CITIZENS OWN AND USE FACTORS OF PRODUCTION FOR THEIR OWN PROFIT
FREE ENTERPRISEFREE ENTERPRISE
COMPETITION IS ALLOWED TO FLOURISH WITH A MINIMUM OF GOVERNMENT INTERFERENCE
COMPETITION IS ALLOWED TO FLOURISH WITH A MINIMUM OF GOVERNMENT INTERFERENCE
FEATURES OF CAPITALISMFEATURES OF CAPITALISM
MARKET IMPORTANT PART OF OUR ECONOMIC
SYSTEMLOCAL, STATE, NATIONAL, GLOBALCONNECT CONSUMERS & BUSINESS
IN FACTOR & PRODUCTCONSUMER MOST IMPORTANTCONSUMER SOVEREIGNTY
Consumers as king or ruler of the market
MARKET IMPORTANT PART OF OUR ECONOMIC
SYSTEMLOCAL, STATE, NATIONAL, GLOBALCONNECT CONSUMERS & BUSINESS
IN FACTOR & PRODUCTCONSUMER MOST IMPORTANTCONSUMER SOVEREIGNTY
Consumers as king or ruler of the market
FEATURES OF CAPITALISMFEATURES OF CAPITALISM
ECONOMIC FREEDOMCHOOSE TYPE OF JOB CHOOSE WHEN & WHERE WE WANT
TO WORK AND FOR HOW MUCHCHOOSE PRODUCTS WE BUYBUSINESS CHOOSE THE PRODUCTS
THEY PRODUCE OR SALE
ECONOMIC FREEDOMCHOOSE TYPE OF JOB CHOOSE WHEN & WHERE WE WANT
TO WORK AND FOR HOW MUCHCHOOSE PRODUCTS WE BUYBUSINESS CHOOSE THE PRODUCTS
THEY PRODUCE OR SALE
FEATURES OF CAPITALISMFEATURES OF CAPITALISM
PRIVATE PROPERTY RIGHTSTAKE BETTER CARE OF ITEMS YOU
OWN AS OPPOSE TO RENTINGFREEDOM TO DISPOSE OF ITINCENTIVE TO WORK, SAVE, AND
INVEST
PRIVATE PROPERTY RIGHTSTAKE BETTER CARE OF ITEMS YOU
OWN AS OPPOSE TO RENTINGFREEDOM TO DISPOSE OF ITINCENTIVE TO WORK, SAVE, AND
INVEST
FEATURES OF CAPITALISMFEATURES OF CAPITALISM
COMPETITIONCAPITALISM THRIVES ON THISINVISABLE HAND (ADAM SMITH)
DRIVES PRICES DOWNREWARDS MOST EFFICIENT
PRODUCERS & FORCES OTHERS OUT OF BUSINESS
COMPETITIONCAPITALISM THRIVES ON THISINVISABLE HAND (ADAM SMITH)
DRIVES PRICES DOWNREWARDS MOST EFFICIENT
PRODUCERS & FORCES OTHERS OUT OF BUSINESS
FEATURES OF CAPITALISMFEATURES OF CAPITALISM
THE PROFIT MOTIVEFREE TO RISK EVERYTHING IN
BUSINESS VENTUREGOES WELL-PROFIT GOES BADLY - BANKRUPT (REPO)PROFIT: AMOUNT LEFT OVER AFTER
ALL COST OF PRODUCTION HAVE BEEN PAID
THE PROFIT MOTIVEFREE TO RISK EVERYTHING IN
BUSINESS VENTUREGOES WELL-PROFIT GOES BADLY - BANKRUPT (REPO)PROFIT: AMOUNT LEFT OVER AFTER
ALL COST OF PRODUCTION HAVE BEEN PAID
FEATURES OF CAPITALISMFEATURES OF CAPITALISM
VOLUNTARY EXCHANGEYOU AND THE SELLER-GIVE AND TAKEBOTH PARTIES FEEL THAT THEY WILL
BENEFIT
VOLUNTARY EXCHANGEYOU AND THE SELLER-GIVE AND TAKEBOTH PARTIES FEEL THAT THEY WILL
BENEFIT
SPREAD OF CAPITALISMSPREAD OF CAPITALISM
NO ONE PERSON INVENTEDSPECIALIZATIONCOMPARATIVE ADVANTAGE
NO ONE PERSON INVENTEDSPECIALIZATIONCOMPARATIVE ADVANTAGE
ADAM SMITHADAM SMITH
WEALTH OF NATIONS 1776LAISSAZ-FAIRE ECONOMICS
HANDS OFF - NO GOVERMENT REGULATIONS OR INTERFERANCE
INDIVIDUALS SEEKING TO MAKE A PROFIT BENEFIT ALL OF SOCIETY
INVISABLE HANDCOMPETITION
WEALTH OF NATIONS 1776LAISSAZ-FAIRE ECONOMICS
HANDS OFF - NO GOVERMENT REGULATIONS OR INTERFERANCE
INDIVIDUALS SEEKING TO MAKE A PROFIT BENEFIT ALL OF SOCIETY
INVISABLE HANDCOMPETITION