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Personal Economic AnalysisThe study of the roles people play in an economic system.Worker

Citizen

Consumer

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Free Enterprise System

Consumer Roles In the US & Global

Economy

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Who Wants to Buy?

Write down several things that you have to buy this week

Write down some things you would like to buy this month

What is the difference?

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Economics TodayEconomics Today

Economics Definition

study of the process that involves choice making as people try to satisfy needs and wants

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Economics TodayEconomics Today

Unintended EffectsThings don’t always go as planned

Do they matter? YES!!Think: Effects both intended and unintended

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Costs & Benefits

Everything has a cost

Opportunity costs (choices!)

Examples??

Economics Today

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Opportunity Cost

What is given up to do something different.

Save my moneyor go on

Vacation?

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Economics TodayEconomics Today

What is Scarcity?

(Needs) Wants --> utility

Tangible (goods) vs Intangible (services)

Unlimited wants - Limited resources

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Scarcity --->>> Choices

Cannot have both choices

Leads to ----------------------------->>>

Economics TodayEconomics Today

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The Link Between SCARCITY, CHOICES, and OPPORTUNITY COSTS

Scarcity Choices OpportunityCosts

Economics TodayEconomics Today

Poll Everywhere Review from Day 1

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If you have UNLIMITED texting…

You can use Poll Everywhere

How To Vote via Texting

1. Standard texting rates only (worst case US $0.20)2. We have no access to your phone number3. Capitalization doesn’t matter, but spaces and spelling doTIPS

EXAMPLE

How To Vote via PollEv.com

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How To Vote via PollEv.com/username

Capitalization doesn’t matter, but spaces and spelling doTIP

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How To Vote via Twitter

1. Capitalization doesn’t matter, but spaces and spelling do2. Since @poll is the first word, your followers will not receive this tweet

TIPS

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Poll: Which of the following is not scarce?

Poll: What happens to price when a good become...

Poll: The study of the process that involves c...

Poll: Pat says, "If I didn't go to the movie t...

Poll: Which of the following can affect the he...

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LAND

LABOR

CAPITAL

ENTREPRENEURSHIP

Economics TodayEconomics Today

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$$$$ (cost) for these resources

Land --> Rent

Labor --> Wages, Salaries

Capital --> Interest

Entre --> Profits

Economics TodayEconomics Today

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Hmm…

Imports

Exports

Outsourcing

Tariffs

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Global Effects

Does what’s happening in the rest of world effect the US?

You Bet!!

But How?

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Global Economy

Why is this international trade so important?Think about those things we would not have

Think about what other countries wouldn’t have

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Global Economy

Have computers changed the way business is done?

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Global Economy

Which countries are the most economically stable?

Why?

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How Do We Measure Economic Growth?

Personal Income

Consumer Price Index

Gross Domestic Product

Inflation

Unemployment Rate

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Gross Domestic ProductConsumer Spending + Government

Spending + Business Investment +Foreign Trade =GDP

•Total value of all final goods and services in an economy

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GDP-Where do we count it?

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What is Inflation?

When Prices Increase

A dollar cannot buy as much

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InflationWhat causes an increase in prices?Change in interest ratesSurging economy

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Inflation Effects

Who is Hurt by Inflation?

Who is Helped by Inflation?

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A retired person who lives on fixed interest

from bank certificates of deposit (CDs)

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A family that bought a house and has a fixed interest rate mortgage

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A retired teacher whose income comes from a fixed income pension?

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A two income family. The wife is a medical

doctor, and the husband is a financial

analyst?

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Government & the Economy

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A NATION AT WORKHOW WELL ARE WE

DOING?

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Labor Force

Unemployment

Underemployment

Supply, Demand, Employment

EMPLOYMENT

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Our Free Enterprise System

Our Free Enterprise System

The Business Cycle

Recurrent swings (up and down) in real GDP

Prosperity/PeakRecession/ContractionRecovery/ExpansionDepression/Trough

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Our Free Enterprise SystemOur Free Enterprise System

The Business Cycle

0

5

10

15

20

25

30

35

40

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1 2 3 4 5 6 7 8 9 10 11 12

prosperity prosperity

recession

depression

recovery

years ---->>

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Long-term GDP trendLong-term GDP trend

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Our Free Enterprise SystemOur Free Enterprise System

prosperity

What conditions would exist in an economy if there was: Prosperity/PeakRecession/ContractionRecovery/ExpansionDepression/Trough

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Economic Policies

Supply & Demand

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Candy Auction!

Supply & Demand

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Quantity Demanded

The number of products a consumer is WILLING & ABLE to buy at a specific price.

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Law of Demand

Amount consumers are willing & able to buy at all prices

As P D

As P D

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What changes Demand? The # of Buyers

Real Income

Price of Related Goods

Price of Substitutes

Fads & Fashion

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Quantity Supplied

The number of products a business is WILLING & ABLE to sell at a specific price.

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Law of Supply

Amount businesses are willing & able to produce at all prices

As P S

As P S

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What changes Supply?# of Sellers (competition)Price of Factors of ProductionPrice of Related Goods Price of SubstitutesGovernment PolicyNatural Disaster

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So What’s the Point?!

Equilibrium--the number demanded of a product equals the number of sold of a product.

We want the perfect situation

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Equilibrium

P

Q

DS

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What if it’s Not Perfect?

SurplusWhen supply exceeds demand

ShortageWhen demand exceeds supply

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Surplus

P

Q

DS

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Shortage

P

Q

DS

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Price Elasticity of Demand

Measure of the change in Demand as a result in the change of prices

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Elastic vs. Inelastic

Large change in demand w/ a change in price

•Luxuries

•Many substitutes

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Elastic vs. InelasticLittle or no change in demand w/ a change in price

•Necessities•not many substitutes

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Economic System What type of economic system

do we have here in the US?

What other types of systems exist in the world?MarketCommandTraditional

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Capitalistic Economy

Element of Market EconomyProfit Motive

Standard of Living

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Devilonia

Freedom

Efficiency

Growth

Security

Opportunity

Stability

Equity

7 Economic Goals

Freedom

consumers have a choice in the products and services they use.

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Efficiency

what is the best use for the available resources?

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Growth

where do we want to be economically years from now?

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Security

should our citizens be financially self reliant or should the government provide for them?

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Opportunity

Should our citizens make decisions based on their own experiences and they will find pleasure in?

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Stability

Is the value of our currency a concern of ours?

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Equity

Who should have the authority and how do we distribute power throughout our citizens?

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Review Game Directions

1 Reader (Can also challenge)

1 Answer Sheet Holder

1 Question Picker

1 Challenger

Each position rotates every question!! (Rotate clockwise)

74

Test Wednesday!!Bring a pencil

Study your notes/handouts

Bring something to do after the test

Good Luck!!!