Name: ______Date: ______Per: ____

Chapter 17 and 21- Economics Notes

What is Economics?

Economics

  • Definition:______
  • There will always be a demand for ______and ______.
  • ______= required for survival
  • ______= things we would like to have

Scarcity

  • Since we have unlimited needs and wants and limited resources, this leads to ______.
  • Examples of scarce resources: ______
  • Examples of resources that are not scarce: ______
  • Three things to know about scarcity:
  • Scarcity is not the same as ______.
  • Scarcity requires ______.
  • This is generally done through price.
  • Leads to ______.
  • Definition = struggle between consumers and producers to get the best goods and services at the lowest price.

Law of Supply

Law of supply - as the ______of an item goes up, suppliers will attempt to maximize their profits by increasing the ______offered for sale – businesses will provide more products when they can sell them at higher prices

Law of Demand

the ______the price, the ______the quantity demanded – consumers will purchase fewer products when they must buy them at higher prices

Law of Supply and Demand

the effect that the availability (supply) of a particular product and the desire (or demand) for that product has on price

low supply + high demand = ______

greater supply + lower demand = ______

Making Economic Decisions

Three Basic Questions

  • An economy needs to answer three basic questions because of scarcity:
  • ______to produce
  • ______to produce
  • ______to produce

Trade-offs

  • The alternative you face if you decide to do one thing rather than another.
  • ______forces us to make choices!
  • When you face trade-offs, there is always an ______.
  • Definition: ______
  • Example: ______

Other Costs

  • Fixed = ______
  • Variable = ______
  • Total = ______
  • Marginal cost = ______
  • Marginal benefit = ______

Making Economic Decisions: Cost- Benefit Analysis

  • Comparing ______and ______.
  • If we decide rationally, we should choose actions where the benefits are______than the costs.

Economic Systems

Types of Economic Systems

  • Traditional Economies
  • A pure traditional economy answers the basic economic questions according to ______.
  • Things are done as they were in the past based on tradition, customs, and beliefs (religious).People grow their own food and make their own goods.
  • Examples: ______
  • Command Systems
  • The ______controls the factors of production.
  • The individual has little ______over how the economic questions are answered in a pure command system.
  • Examples: ______
  • Market System (Free Market Economy)
  • A system based purely on ______
  • In this system the ______does not intervene.
  • ______own the factors of production and decide the answer of the basic economic questions.Buyers and sellers exchange goods and services as they choose.
  • Examples: ______
  • Mixed Economic Systems
  • This economic system contains elements of the ______and ______system of government with few elements of ______economics.
  • Examples: ______

Adam Smith and Capitalism

  • ______economist and philosopher
  • Wrote The ______of ______in 1776
  • Individuals left on their own would act in their own ______
  • Guided by ______
  • Role of government is to guarantee free ______
  • Laissez-faire economics = “ to let alone” ______
  • Influenced the philosophy on economics of the ______

Capitalism

  • ______- An economic system in which private citizens own and use the factors of production in order to seek profit.
  • Another term used is ______, which is a system which allows ______to flourish.
  • Sprung from two concepts:
  • People could work for economic ______
  • ______should have a limited role in the economy.

Components of Capitalism

  • ______- where prices of goods and services are determined
  • ______-ability to choose job and when/where we want to work.
  • ______- freedom to use an own our property as we see fit.
  • ______-struggle between buyers and sellers to get lowest prices.
  • ______-driving force that encouraged people to improve position
  • ______-buyers and sellers freely and willingly engaging in market transactions

Factors of Production and What’s GDP?

Production in the U.S.

  • Generally produces two things:
  • ______
  • ______

Factors of Production

  • The economic resources necessary to produce goods and services.
  • There are four types:
  • ______
  • ______
  • ______
  • ______
  • Land
  • Also known as ______
  • “ The gifts of nature”
  • Examples:______
  • Labor
  • The ______and ______efforts that people contribute
  • Capital
  • Manmade items: factories,tools, ______, and ______used to make other products.
  • Entrepreneurs
  • The ______who use the other factors of production in new ways
  • Opening new ______and creating new ______
  • Invention vs. Innovation – assumes risks for new business ventures
  • Examples:______

Productivity

  • Definition: ______
  • Applies to all ______of production
  • Ways to improve productivity
  • ______= concentrating on one good or service
  • ______= dividing one job into multiple smaller jobs
  • Investing in ______, or the skills and abilities of people
  • Leads to economic ______

What is gross domestic product (GDP)?

  • Currency value ( such as U.S. dollar) of all ______goods and services produced within a country in a given period
  • Total ______of a nation
  • ______of nation’s economic well-being
  • Measure of a nation’s economic ______from one period to the next

What’s included in GDP?

  • ______by households
  • ______: groceries, clothes, iPods
  • ______: haircuts, oil changes
  • ______by businesses and households
  • Fixed assets for ______
  • New homes, inventories
  • ______expenditures by local, state, and federal government
  • Roads and schools
  • ______
  • Value of a country’s______to other nations, minus its ______from other nations
  • GDP = Consumption + Investment + Government spending + Net Exports

What’s not included in GDP?

  • Intermediate goods
  • Used goods
  • Underground production (______)
  • Financial transactions
  • Household production
  • Stay at Home Moms
  • Transfer payments

Standard of Living

  • ______of life based on the how much we have
  • The ______of necessities and luxuries that make life easier

Quantity vs. Quality

  • GDP measures how much, but not how well
  • Example: ______

What GDP does not tell us

  • Does not measure ______distribution
  • Does not measure non-monetary output or ______
  • Does not take into account desirable ______, such as leisure or environment
  • Does not measure social ______
  • Correlates to ______but is not a measure of standard of living

Money and Trade

Functions of Money

  • Has ______functions:
  • Medium of ______
  • ______of value
  • Measure of ______.

Types of Money

  • Anything people are willing to ______for ______can be considered money.
  • Most common types of money today:
  • Coins = ______
  • Currency=______
  • ______Accounts
  • ______Accounts

Protecting the Financial System

  • Federal Deposits ______Corporation (FDIC)
  • ______

The Federal Reserve

Responsible for regulating the ______in the US.

Also responsible for supervising the ______ in the US.

Commercial Banks

Savings and Loan Associations (S&Ls)

Credit Unions

Primarily controls the amount of money in the US through monetary policy

The actions that determine the size and rate of growth of the money supply, which in turn affects ______

If the money supply grows too fast, the ______will increase; if the growth of the money supply is slowed too much, then economic growth may also slow

Trade

  • Money______trade because its value transfer between countries

Trade Value Activity!

Group 1 / Group 2 / Group 3 / Group 4 / Group 5 / Total
Round 1
Round 2
Round 3

The Economy and You

What can you do to be involved in the economy?

  • ______
  • Read/Watch the ______
  • Gather ______on businesses
  • Understand ______
  • =______
  • Examples: Jolly Ranchers/Candy
  • Understand the Role of ______
  • To provide what the ______cannot
  • Maintain ______
  • ______incentives

Your Role in the Economy

  • What is your role in the economy? ______

Consumer Rights

  • ______: Movement to educate buyers about the purchases they make and to demand better and safer products
  • Consumer ______
  • _____ major rights:
  • Right to a safe product
  • Right to be informed
  • Right to choose
  • Right to be heard
  • Right to redress (payment for damaged goods)

Consumer Responsibilities

  • If your product isn’t ______, it is the consumers responsibility to begin the process of getting it ______
  • NOT BY YOURSELF!
  • Fixing it yourself will cancel ______, the promise made by seller to repair or replace a product within a certain amount of time.
  • Ethical Behavior
  • =______
  • Examples: Returning a used item

Role as a Consumer

  • Use of your income
  • Disposable: ______
  • Discretionary: ______(rent, utilities, groceries, etc.)
  • You can pay using:
  • Cash
  • Charge Account/ Credit Card
  • Debit Cards
  • ______Making
  • Opportunity Cost
  • ______
  • Deciding how you will spend your money
  • Consider your ______

Saving

  • Definition: ______
  • Saving is good for the economy as a whole:
  • You have more money to ______later
  • When a business saves, they can expand  ______
  • If you place your money in a savings account, you earn ______, the payment received when you lend money or allow someone else to use your money
  • Saving involves a ______
  • Buying something bigger later vs. something cool now