Unit 7 Economics Macroeconomics December 2, 2013.

Unit 7Economics

Macroeconomics

December 2, 2013

What is Economics?

The study of scarcity, or how society tries to satisfy unlimited wants through the use of limited resources.

Scarcity: the gap between what the consumers would like (UNLIMITED) and what the consumers can get (LIMITED).

Trade Off: the process of giving up one desire in order to satisfy another desire.

Opportunity Cost: the value of what we give up in order to get or do something else. (LOST)

Words to Know:

Trade Offs &Opportunity Costs

Two highly talented athletes want to compete for Coach ‘M’ who has only 1 opening on the team. Each are equally talented. Since he can only keep one, he must choose:

he decides to keep athlete ‘X’ because he is also a good student and is highly ‘coachable’.

What was the trade off? What is the opportunity cost?

Opportunity cost is what you lost!

Need: something that is required Examples:

Want: something that is desired Examples:

Good: a tangible product Examples:

Service: a treatment (you cannot touch it!) Examples:

Consumer: a buyer Examples:

Producer: The seller Examples:

Production: the process of making goods or services.

Examples:

December 3, 2013

Review Budgeting Wage: $11.00 How much do they

make an hour? How much do they

make a week? How much do they

make a month? How much do they

make a year?

Salary: $110,000. How much do they

make an hour? How much do they

make a week? How much do they

make a month? How much do they

make a year?

Review, Opportunity Cost On Saturday Ty’Shawn is thinking about

going to the Panthers game. If he doesn’t go to the game he might stay home and work on homework, help his neighbor paint his house, or hang out and watch TV. What is an opportunity cost of Ty’shawn choosing to help his neighbor?

What is the opportunity cost of choosing to go to college?

Review, Opportunity Cost The North Carolina government decides to

build more prisons at the cost of $20.5 Billion. In order to do this they will increase the sales tax. The state decided to build prisons instead of much needed schools, rehabilitation programs, and gun safety programs.

John decided to go a party Friday night instead of studying for his Civics and Economics Test. Studying increases his chances of passing the Goal 6 test. He could have studied for his test, or gone to the movies.

Review, Opportunity Cost Tom chose to get a massage this week

instead of getting new sneakers or pay for his cell phone bill and cable bills.

Carrie decided to spend her last $3.00 on a bottle of lotion. During lunch the next day she is unable to buy herself any food. She is hungry the rest of the day. She gets into her car and her gas light is on E.

Jaquan studied all night for his Geometry Test. He wanted to go out with is friends and go see the new Happy Feet Movie. He passed his test with a 97%.

Personal Financial Literacy Online!!!!! Visit www.everfi.com Select ‘Login’ (on the top right) Select ‘Sign-Up’(on the top right) Put in Information you will remember!!!!!

When you create a LOG-IN! REMEMBER YOUR INFORMATION! WRITE IT DOWN! TAKE A PICTURE! REMEMBER IT!!!!!!!!!!!!!!!!!!!!!!!!

After you do this, get out a pair of headphones, and Sit tight and wait

3 Basic Economic QuestionsWhat to produce?

How to produce?

For whom to produce?

THE FACTORS OFPRODUCTION

What to produce?

There are 4 Factors of Production:

Land or Natural Resources

Capital

Labor

Entrepreneurship

Land or Natural Resources

Materials that are NATURALLY MADE and transformed into something else

Examples:OilTimberLandCropsNatural gasMilk

2 Types of Natural Resources RENEWABLE

Can be replaced or renewed or recycled

ex: wood, water, crops

NON-RENEWABLE Once used, resource is

gone Ex: Oil, Natural Gas,

Gold

LABOR PEOPLE who

work to produce a good or service

Example: Construction

worker Teacher Line cook

ALWAYS a PERSON!

Types of Labor

Blue Collar: typically performs “manual” labor (uniform)

White Collar: typically performs more “business” like labor

Professional: most advanced type of labor- highest educational degrees.

Skilled: typically knows a craft

Capital PHYSICAL Man-made instruments

that assist in making something else

Examples: Hammer Robot Book Computer

ALWAYS a THING!

Capital HUMAN

Investment in knowledge or training for a laborer to become more productive

Examples:Training programsSkills developmentAdvanced degrees

Entrepreneurs People who RISK time

and money ($) to start their own business and organize the other factors of production.

Examples: P. Diddy Lemonade Stands Martha Stewart

December 10, 2013

Agenda Notes:

Productivity Types of Economies

Computer Lab 30 Minutes-Part 1-3 PFL Project 30 Minutes on EverFi.com

Everything is due by Friday

Productivity

Productivity The measure of the efficient use of an

economy’s resources. Making the MOST of the resources you

have. Utilizing resources to 100% of their

capacity. UNDERUTILIZATION: not using resources

efficiently

Production Possibilities Curve: graphic representation of an economy’s productivity potential

0

1

2

3

4

5

6

7

8

0 1 2 3 4 5 6 7 8

Units of clothing (millions)

Un

its o

f fo

od

(m

illion

s)

Units of food Units of clothing (millions) (millions)

8m 0.0 7m 2.2m 6m 4.0m 5m 5.0m 4m 5.6m 3m 6.0m 2m 6.4m 1m 6.7m 0 7.0m

A Production Possibilities Curve

A Production Possibilities Curve

Productivity The more productive a nation’s

economy, the more potential for profit.

A company’s goal is to maximize profit. One way this can be done it to increase productivity.

Division of Labor When work is divided amongst many

workers.

Each worker specializes in one task making the work go faster and more efficient.

Assembly Line Each member of the line does the

same procedure or task on each input item.

The more items created the more potential for profit a company has.

Specialization When each worker learns a

specific/one job and becomes a professional in that specific task.

Law of Diminishing Returns By adding more factors of production

(i.e. technology, better trained workers, better entrepreneurship) it leads to greater efficiency.

But ONLY to a certain point and then you begin

to lose efficiency.

Law of Diminishing Returns

Maximum returns is 300- using 200 agents.

When you add any additional agents, the number of returns decreases.

Comparative Advantage When a nation has an

advantage in the production of a particular product over another.

Example: The Southern Colonies had

a comparative advantage to produce cotton over the New England Colonies.

Types of Economies

Types of Economic Systems Traditional Command Market Mixed

Traditional Economy What did you Produce?

Determined by tradition, ancestors, customs

How did you Produce it? Produce the same way its always been done;

NO SPECIALIZATION For Whom did you Produce? Produce for tribe, village, local community

Examples: Ex. Native American, Aborigines, Amish Barter: trade item for item (no money)

* limited growth potential!

Command Economy What did you Produce?

Determined by the government or central planner

How did you Produce it? Told how to by central

planner; SPECIALIZATION

For Whom did you Produce? The gov’t or central planner

Ex. China, N. Korea, the former U.S.S.R. (Soviet Union)

Market Economy What did you

Produce?Determined by

whatever would make the most profit

How did you Produce it?The way that made the

most profit; SPECIALIZATION

For Whom did you Produce?Consumers, people

interested in product

Ex. UNITED STATES!

Mixed Economies

Have elements of market economies with some command

Ex. Canada, France, England

December 12, 2013

Pick up the THREE Sheets!

Agenda Housekeeping

What time do we have left? Demand

.ppt Individual Work Changes

Supply .ppt Individual Work Changes

Supply and Demand, The Epic Merger Equilibrium Prices Shortages and Surpluses

DemandDemand

The desire to own something and the ability to pay for it!

The Law of The Law of DemandDemandThe Law of DemandThe Law of Demand states states

that as prices decrease that as prices decrease people are willing/able to buy people are willing/able to buy more. As price increases more. As price increases people are willing/able to buy people are willing/able to buy less.less.

Inverse/opposite relationship P D P D

Demand Schedule Price Quantity

Demand Curve Graphic representation

of the demand schedule.

y-axis = price x-axis = quantity

$5.00 100

$10.00 70

$15.00 50

$20.00 30

$25.00 20

$35.00 10

Market Demand Curves

Show how people’s buying habits will change at certain prices ONLY

Show a specific market only

Assume no other factors change (just price)

Shifts in Demand

WHY WOULD THERE BE A CHANGE IN DEMAND?

1. Consumer’s income changes: As income increases, demand increases.

2. Consumer Expectations: if shortage is expected, demand increases

3. Population Size: Population increases, demand increases

4. Consumer Taste: If a good becomes popular, demand increases.

5. Change in Price of Related Goods: * Compliments: goods bought together

Comp. good price increases, the good’s demand decreases

*Substitutes: goods used in place of one another. If a substitute

price increases, the good’s demand

increases

People’s Income IncreasesEffect on Demand

Demand Increases (shift right)

P

Q

D1 D2

Bad Weather (for product)Effect on Demand

Demand Decreases (shift left)

P

Q

D1D2

Substitutes!

Compliments

Substitutes!

Compliments!

Substitutes!

Substitutes!

Compliments!

Price of Complementary Good Decreases

ex: peanut butter & jelly

Effect on Demand Demand

Increases (shift right)

P

Q

D1 D2

Price of Substitute Good Decreases

ex: Pepsi & Coca-Cola

Effect on Demand Demand

Decreases (shift left)

P

Q

D1D2

ELASTICITY of DEMAND: How much the quantity demanded will change if the price rises or falls?

ELASTIC DEMAND: demand that is very sensitive to a change in price goods that one might stop buying or cut

back on as price increased (SUVs, Luxury items)**on a graph this demand curve will be FLAT

INELASTIC DEMAND: demand that is not very sensitive to a change in price goods that you would buy at any price;

there are few if any substitutes for these goods (milk, gas, prescription drugs)

**on a graph this demand curve would be very steep.

Independent Work! Work on the Predicting Demand

Worksheet Demand of Pizza!

Supply

The amount of goods or services

available

The Law of Supply states the higher the price, the larger the quantity produced think like a producer now; at

a higher price firms earn additional revenue and more firms will have incentive to enter the market)

P S P S

Supply Schedule: shows only how price of goods changes the quantity supplied (all other factors remain constant)

Price Quantity

$0.50$0.50 100100

$1.00$1.00 150150

$1.50$1.50 200200

$2.00$2.00 250250

$2.50$2.50 300300

$3.00$3.00 350350

Supply Curve: Graphic representation of the supply schedule. (rises from left to right)

y-axis = price x-axis = quantity supplied

Shifts in SupplyWHY WOULD THERE BE A CHANGE IN

SUPPLY?1. Change in the Price of an Input: Rise

in input cost means decrease in supply because it is too expensive to make, and a fall in input cost will increase supply at all price levels.

2. Technology – lowers cost and increases supply.

3. Government subsidy: payment by the gov’t that supports a business or market. Subsidies increase supply.

4. Increase or Decrease in taxes: increasing taxes decreases supply, decreasing taxes increases supply

5. Government Regulation: Usually increases cost of production and decreases supply. (emission control on cars, FDA nutritional codes on food products)

6. Future expectation of Prices: expect the price to go up the supplier will store goods to sell more in future.

7. Number of suppliers: as more suppliers enter a market to produce a good the market supply of the good will rise (and the opposite)

Costs of Inputs DecreaseEffect on Supply Supply Increases

(shift right)

P

Q

S1 S2

Number of Suppliers Increases

Effect on Supply Supply Increases

(shift right)

P

Q

S1 S2

Weather is bad for product

Effect on Supply Supply

Decreases (shift left)

P

Q

S1S2

Elasticity of Supply is a measure of the way suppliers respond to a change in priceElastic Supply – a small

increase in price has a big effect on supply (flat)Ex. Things that are cheap, use few resources, made quickly

Inelastic Supply – a small increase in price has a small effect on supply (steep)Goods that are limited, take

many resources to produce, require a lot of time to produce.

Ex. Diamonds, Bentley, Gas

Change in Supply

Reasons for change in Supply Cost of Inputs

Number of Suppliers

Weather

Situation #1Dick’s Sporting Goods and Academy goes

out of business. What is the impact on basketballs in Charlotte?

-number of suppliers changes-Supply Decreases

Situation #2A hurricane destroys the orange groves in

Florida. What is the impact on the supply of Orange Juice?

-weather changes-Supply Decreases

Situation #3The price of gas decreases. What is the

impact of trucking companies?

-cost of inputs change-Supply Increases

Situation #4Nike moves their factory from the U.S. to

China where workers are paid less. What is the impact on the supply of Nike’s shoes?

-change in input costs-Supply Increases

Supply & Demand

Equilibrium: the point at which quantity demanded and quantity supplied are equal

At a point of equilibrium…. the price and quantity are balanced the market for a good/service is stable

Disequilibrium: any price or quantity not at equilibrium

Price of CDs Quantity Demanded Quantity Supplied

$5.00 100 10

$10.00 80 20

$15.00 30 30

$20.00 20 80

$25.00 10 100

A Fully Labeled Supply & Demand

P

Q

D1

S1

Equilibrium Point

P1

Q1

Market Clearing Price

E1

Excess Demand (SHORTAGE): when quantity demanded is more than quantity supplied

Price is too low! not enough!

P

Q

D1

S1

P1

QS QD

E1

Excess Supply (SURPLUS): when quantity supplied is more than quantity demanded

Left-overs Price is too high!

P

Q

D1

S1

P1

QD QS

E1

A shift in the demand curve or the supply curve will result in a new equilibrium price.

Orange Juice

P

Q

D1

S1

E1

PRICE ____

QUANTITY____

BECAUSE OF A CHANGE IN

SUPPLY

P1

Q1

S2

E2

P2

Q2

Coca-Cola

P

Q

D1

S1

E1

PRICE ____

QUANTITY____


DEMAND

P1

Q1

D2

E2

P2

Q2

Video Games

P

Q

D1

S1

E1

PRICE ____

QUANTITY____


DEMAND

P1

Q1

D2

E2

P2

Q2

Clothing

P

Q

D1

S1

E1

PRICE ____

QUANTITY____


SUPPLY

P1

Q1

S2

E2

P2

Q2

Government Intervention in a Market Economy

Price Ceiling: a maximum price that can be legally charged for a good or service (example: rent control)

Price Floor: a minimum price for a good or service (example: minimum wage)

Price Floor

P

Q

D1

S1

MCP

E1

Price Floor

Price Ceiling

P

Q

D1

S1

MCP

E1

Price Ceiling

Changing Prices

Inflation: a general increase in prices (over the years, prices rise and fall, but in the American economy, they have mostly risen)

Deflation: A substantial drop in the prices

Economic Theories

Capitalism Capitalism

an economic system in which private citizens own and use the factors of production in order to seek a profit

Free Enterprise/Market Economy: another term used to describe the American economy

Features of CapitalismFeatures of Capitalism

1. Private Ownership of Resources: we have the freedom to own and use, or dispose of, our own property as we choose. This gives us the incentive to work,

save, and invest because we can keep what we earn.

2. Self Interest Motives (economic freedom):

Each person can choose the type of job to have and when and where they want to work.

Consumers have the right to choose the products that we will buy.

Businesses have the right to choose the products that they will produce and sell.

3. Consumer Sovereignty: the idea that the consumer is the “king” or ruler of the market

the one who determines what products will be produced

businesses try to produce the products that people want most.

4. Available Markets: places where the prices of goods and services are determined as exchange takes place.

5. Competition: the struggle that goes on between buyers and sellers to get the best products at the lowers prices.

Adam Smith: Father of Capitalism

Smith believed that all individuals seeking a profit end up benefiting society as a whole.

wrote The Wealth of Nations

developed the idea of laissez-faire economics. (“to let alone”) the government should not interfere in

the market place.

Adam Smith: Father of Capitalism believed that the invisible hand guides a

nation’s resources to their most productive use. Tools of the invisible hand include self-

interest and competition.

Karl Marx: Father of Communism Command Economy

Equality of the classes

wrote the Communist Manifesto. “ Workers of all lands, unite”

Types of Business Structures

What is Liability?

Unlimited liability: Risk extends beyond your share in a company. (you could lose EVERYTHING!)

Limited Liability: Risk only involves your share of the company.

Sole-Proprietorship

Description A business owned and managed by a single

individual

Advantages Disadvantages Easy to start - Unlimited

Liability Sole receiver of profit - Limited Life Full control No additional taxes

Partnership

Description a business organization owned by two or more

persons

Advantages Disadvantages Easy to start - Share Profits Specialization - Unlimited liability No additional taxes - potential for conflict

Corporation

Description a legal entity owned by individual stockholders Stockholders own shares of stock – a certificated

ownership in a corporations. Stockholders are part owners of the corporation.

Advantages Disadvantages Limited Liability - expensive to start Transferable ownership - Double taxes Long life Potential for growth - more

requirements & regulations

Franchise

Description Semi-independent company that is part of a

parent corporation

Advantages Disadvantages Built-in reputation - Loss of freedom &

decision making

Limited Liability

Non-Profit A business that operates under a plan that

distributes the profits made to other charitable organizations.

Advantages Disadvantages Tax Exempt Relies on charityProvides Services Follows Market

Multinational Corporations

Definition – a large corporation that produces and sells its goods and services throughout the world

Advantages Disadvantages Provides jobs & -Low wages

products around the world -Poor working conditions

Spread new technology around the world Increases standard of living

in many poor countries

Corporate Combinations

Horizontal Merger – joining of two or more firms competing in the same market with the same good or service EX: Sprint buys Nextell, AT&T buys Suncom

Vertical Merger – joining of two or more firms involved in different stages of producing the same good or service. EX: Oils companies buy oil fields, tankers, and

gas stations

The Circular Flow Model

Shows the movement of resources within an economic system.

Markets: place where goods & services are exchanged.

Sectors: units of consumers or producers

Product Market Provides goods & services to the following

sectors: -consumer -business -government -foreign

Factor Market Receives labor and resources from the

following sectors: -consumer -business -government

Consumer SectorProvides LABOR to the

FACTOR MARKET

Purchases GOODS & SERVICES from the PRODUCT MARKET.

Business SectorReceives resources

from the FACTOR MARKET.

Sends finished goods to the PRODUCT MARKET.

Purchases goods from the PRODUCT MARKET to make other goods.

Gov’t Sector Receives resources from the FACTOR

MARKET. Provides goods & services to the

PRODUCT MARKET. Purchases goods & services from the

PRODUCT MARKET.

Foreign Sector

Buys and sells goods & services in the PRODUCT MARKET.

fig

The circular flow of goods and incomesThe circular flow of goods and incomesThe circular flow of goods and incomesThe circular flow of goods and incomes

fig

Goods and services


fig

Goods and services

$Consumer

expenditure


fig

Goods and services

$Consumer

expenditure

Services of factors of production (labor, etc)


fig

Goods and services

$Consumer

expenditure

Wages, rentdividends, etc.

$

Services of factors of production (labor, etc)


Conglomerate – merging of more than three businesses that make unrelated products

EX: Phillip Morris & Kraft, General Electric & NBC

Types of Market Structures

Perfect Competition Many buyers and sellers in the market Sellers offer identical products Buyers and sellers are well informed about

products Sellers are able to enter and exit the

market freely

Perfectly competitive markets are efficient at equilibrium!!

Few markets are perfectly competitive because barriers keep the companies from entering or leaving markets easily start-up costs are high many require high degrees of technology

Monopoly A market dominated by a single seller

No variety of goods and the seller has complete control over prices

Forms when barriers prevent firms from entering a market with only one seller

Natural Monopoly: a market that runs most efficiently when one large firm supplies all of the output

Example: public output

Government Monopoly: a monopoly created by the government Ex: allowing a natural monopoly to form Ex: patent: inventor of the new product has

exclusive rights to sell it

Remember one of the goals of the gov’t in the US has been to encourage competition in the economy

Antitrust laws: laws that encourage competition in the market Sherman Antitrust act: banned monopolies

and other business combinations that prevented competition 1890)…this act was used to break up companies like AT&T

Oligopoly a market structure in which a few large

firms dominate a market (4 largest firms produce 70-80% of the output)

barriers can also create oligopolies…like start-up costs and technology Ex: cell phones, airlines, cruise ships

Stop!!! End Economics Part 3

Unit-8

Emani Cruz Enizaha Irvin Danixia Jiron India Livingston Lesley Sanchez Nicolas Warren Richard Watson

The Business Cycle

1. GDP – Gross Domestic Product - measures the output of the entire economy

2. Personal Income - measures the total income of

families in one year, higher the income the more money they have to spend

3. Stock Market Averages - reflects investors

attitude and (S&P500, The Dow) movement of interest rates

4. Unemployment rate- reflects layoffs of workers;

how many unemployed at one time

Economic Indicators

Expansion:a period of economic growthreal GDP risesEmployment increasesProduction increasesMoney supply increasesConsumer spending increasesPrices increase (INFLATION)

Peak:The highest point in the business cycle

Full Employment (those who want a job have a job)

Production at full capacityMoney supply high Consumer spending high Prices high

Trough:The lowest point in the business

cycleHigh rates of unemploymentProduction nearing a standstillMoney supply low (limited

lending)Consumer spending lowPrices lowLong period (1 yr.) called a

DEPRESSION

5. Building permits- indicates construction activity

6. Manufacturers’ new orders- predicts actual production change 7. Consumer Price Index - measures the

rate of change in the price of 400 consumer goods

December 17, 2013

Grab a MAP!

Buying Stock: Corporations sell stock to raise funds. Stock

represents ownership in the corporation and is issued in portions called shares.

The Stock Market

Stockholders make money through: dividends- a portion of a corporation’s profit,

usually paid out quarterly capital gains- money made when an investor

sells stock for more than he/she paid for it

Stockholders lose money through: capital loss- money lost when an investor sells

stock for less than he/she paid for it or when a company doesn’t make a profit, and can’t pay out dividends

Stock split- when each single share of stock splits into more than one share. This is done to encourage investors to buy the stock, and generally results in a rise in stock value afterwards.

Stock Trade: Stockbrokers- link buyers and sellers of

stock; usually work for a brokerage firm that specializes in trading stock.

• Stock is bought and sold on stock exchanges. Most important in the US:– New York Stock Exchange (NYSE)- the country’s

largest and most powerful exchange; only for the largest and best-known companies (called blue chip companies)

– OTC Market (over the counter)- stock sold electronically

– Nasdaq (National Association of Securities Dealers Automated Quotations)- the American market for over-the counter trades

• Daytraders- buy and sell stock rapidly in hopes of trying to make a profit; very risky

Measuring the Stock Market Bull Market- when the stock market steadily rises over

a period of time Bear Market- when stock market steadily falls over a

period of time The picture of stock performance can be determined by

looking at the Dow Jones Industrial- which represents about 30 large

companies S & P 500 (Standard and Poors)- which tracks price

changes in 500 companies.

Fiscal & Monetary Policy

What is the purpose of Fiscal and Monetary Polices?

To ensure economic expansions and contractions are not too severe

NOT

Economic Problem: InflationOccurs when the market is flooded with too

much money in the hands of consumers

So… the Goal is to DECREASE the amount of $ in the hands of consumers

Fiscal Policy(Congress) Taxes

Gov’t Spending

Welfare (transfer) payments

Economic Problem: UnemploymentOccurs when the market slows down due to

a lack of consumer spending.

So… the Goal is to INCREASE the amount of $ in the hands of consumers

Fiscal Policy(Congress) Taxes

Gov’t Spending

Welfare (transfer) payments

Economic Problem: InflationOccurs when the market is flooded with too

much money in the hands of consumers

So… the Goal is to DECREASE the amount of $ in the hands of consumers

Monetary Policy(Federal Reserve) Interest (Discount) Rates

Reserve Ratio

Sell Bonds

TIGHT Monetary Policy

Economic Problem: UnemploymentOccurs when the market slows down due to

a lack of consumer spending.

So… the Goal is to INCREASE the amount of $ in the hands of consumers

Monetary Policy(Federal Reserve) Interest (Discount) Rates

Reserve Ratio

Buy Bonds

LOOSE Monetary Policy

December 18, 2013

Government Regulations

P. 2 #5

Social Security Act of 1935 (SSA) WHAT IT DID

Provides money to people who cannot support themselves

IMPACT ON US ECONOMY Stabilizes the

economy in times of economic depression

National Labor Relations Act, 1935 WHAT IT DID

Workers have the right to join unions and use collective bargaining

IMPACT ON THE US ECONOMY Gave protection

and power to the workers

Definitions Unions- an organized association of

workers formed to protect and further their rights and interests; a labor union.

Collective Barganing- negotiation of wages and other conditions of employment by an organized body of employees.

Fair Labor Act, 1938 WHAT IT DID

Est. minimum wage of 25 cents per hour and time and a half for overtime

IMPACT ON THE US ECONOMY Set a price floor on

labor for the U.S.

Taft Hartley Act, 1947 WHAT IT DID

Put restrictions on labor unions

IMPACT ON THE US ECONOMY Unions cannot be

all powerful

Economic Globalization North American Free Trade Agreement

(NAFTA) World Trade Organization, WTO European Union (EU) International Monetary Fund (IMF) World Bank United Nations

NAFTA On January 1, 1994, the North American

Free Trade Agreement between the United States, Canada, and Mexico (NAFTA) entered into force. It allows these countries to trade freely with no

import or export taxes It is supposed to increase trade in North

America Many US Companies moved or outsourced their jobs

to Mexico in order to decrease labor cost

World Trade Organization The World Trade

Organization (WTO) is the only global international organization dealing with the rules of trade between nations.

It allows for a legal body to oversee trade between nations

European Union The EU was created

in the aftermath of the Second World War. to foster economic

cooperation a huge single market

has been created and continues to develop towards its full potential

IMF an organization of 188 countries

working to foster global monetary cooperation secure financial stability facilitate international trade promote high employment and sustainable

economic growth reduce poverty around the world.

World Bank End extreme poverty around the world in

one generation! End extreme poverty by decreasing the

percentage of people living on less than $1.25 a day to no more than 3%

Promote shared prosperity by fostering the income growth of the bottom 40% for every country

The United Nations The United Nation is

a legislative organization that fosters: Peace and Security Development Human Rights Humanitarian Affairs International Law

The United States Major Economic

Regions

The Frost Belt The Frost Belt is a

region of the US considered to include the Northeast of the Great Lakes Region, and much of the Upper Midwest. The region is known for its cold, frost-producing winters and heavy snowfall.

The Rust Belt A postindustrial region

straddling the NE and the East North Central States, referring to economic decline, population loss and urban decay due to the shrinking of its once powerful industrial sector. The term gained popularity in the United States in the 1980s

Sun Belt The main defining

feature of the Sun Belt is its warm-temperate climate with extended summers and brief, relatively mild winters; Florida, the Gulf Coast, and southern Texas, however, have a true subtropical climate.

The Belt has seen substantial population growth since the 1960s due to an influx of immigrants, both documented and undocumented; a surge in retiringbaby boomers; and the attractiveness of a mild winter climate.

The Sun Belt

Silicon Valley It is home to many of the

world's largest technology corporations as well as thousands of small startups. The term originally referred to the region's large number of silicon chip innovators and manufacturers, but eventually came to refer to all high-tech businesses in the area, and is now generally refers to the American high-technology

sector.

Silicon Valley continues to be a leading hub for high-tech innovation and development, accounting for one-third (1/3) of all of the venture capital investment in the United States.

Geographically, Silicon Valley encompasses all of the Santa Clara Valley, the southern Peninsula, and the southern East Bay.

Silicon Valley

North Carolina Research Triangle The Research Triangle

Park is home to more than 170 global companies, including: IBM, GSK, Syngenta, RTI International, Credit Suisse, and Cisco,that foster a culture of scientific advancement and competitive excellence.

RTP is located between three major universities: Duke University in Durham, North Carolina State University in Raleigh, and the University of North Carolina at Chapel Hill.

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Unit 7 Economics Macroeconomics December 2, 2013.

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