Economics

  1. What is economics?
  2. It studies how we allocate the limited ______to satisfy unlimited wants
  3. American ______System
  4. Challenges in a free market
  5. ______
  6. Economic systems
  7. The U.S. economy
  8. Factors of ______
  9. Business organizations
  10. The ______flow of Economics -Resources, goods and services and money flow continuously among households, businesses and the government in the U.S. economy.
  11. Individual households own the resources used in production; sell the resources and use the income to ______products.
  12. ______(producers) buy resources used in production; sell the resources and use the income to purchase products. Businesses provide households with income and goods and services.
  13. Governments use ______from individuals and businesses to provide public goods and services.
  14. Production,______and Distribution-Four Questions all Economic Systems must Address
  15. What is produced?*Production* Goods and services must satisfy the consumers wants and desires
  16. HOW should these goods be produced? *Factors of Production*

•______

•Entrepreneurship

•______

•Labor

•Combine the factors of production to make or produce the ______

  1. For WHOM are the goods and services produced?*______*

•Getting the goods and services from producer to consumer

  1. HOW MANY goods and services should be produced? *______*

•Make enough to have a large profit and still have consumer demand. How many is determined by supply and demand.

  1. Supply and ______
  2. ______is the inability to satisfy all wants at the same time due to limited resources
  3. ______must be made as to what to produce, how much to produce and who will receive what is produced.
  4. ______: Mechanism to decide who gets goods and services. The amount that satisfies both producers for profit and consumers for value.
  5. Supply and Demand determine price through their interaction

•______: is the amount of a good or service that consumers are willing and able to buy at a certain price

•______: is the amount of a good or service that producers are willing and able to sell at a certain price.

  1. ______-Incite or motivate, Change economic behavior, Something that spurs someone into action: sale, coupons, etc.
  2. Resources, Scarcity & Opportunity Cost

•Good-Anything that can be grown or manufactured (made) ex. Food, Clothes, Cars,

•Service-Something a person does for someone else in exchange for money or value. Ex. Doctor, Hairdresser, waiter

•Resources-Natural, Human, Capital. Combine to make goods and services

  1. Our Basic Economic Problem…People have______Wants (Food, Clothing, Shelter, Schools, Hospitals, Cars, Transportation) But______areLimited (Land, Soil, Minerals, Fuels, People, Money, Technology
  2. ______The inability to satisfy all wants at the same time;the NEEDS are greater than the RESOURCES. Since resources are LIMITED consumers and producers must make CHOICES
  3. ______: selecting from a set of alternatives
  4. ______: what is given up when the choice is made.*Scarcity forces us to choose which needs and wants to satisfy with available resources. *Scarcity affects decisions concerning what and how much to produce, how goods and services will be produced and who will get what is produced

•Production: (sellers)*Combining resources to make goods and services.*Available resources and consumer preference determine what is produced

•Consumption (buyers) *Using goods and services*Consumer preference and price determine what is purchased

  1. Challenges in a Free Market: Terms
  2. Scarcity-You can't have everything you want. Acceptance of scarcity will help you make more reasoned choices.
  3. ______-Different options from which you can choose. There are many different ways to allocate resources and to solve problems.
  4. Choice-Because you can't have everything you want, you have to make choices from a list of alternatives. When policy-makers decide on a particular resource allocation, recognize that a choice had to be made due to scarcity. You may not like the alternative chosen, you may question the choice, but the villain is scarcity
  5. ______-Choices involve giving up something to get something. All choices have consequences, both positive and negative. You are responsible for the consequences of your choices. Since you make choices, you can't be a victim.
  6. ______-What is given up when a choice is made.All choices have opportunity costs. A good idea is only a good idea if its value is greater than the value of its opportunity cost. Voters must always identify the opportunity cost of a particular policy
  7. Economic Systems
  8. ______-The central government makes decisions and determines how resources will be used.The central government owns property and resources. Businesses are not run for profit.No competition. Lack of consumer choice. The government sets the prices of goods and services. Ex. China, North Korea, Cuba
  9. ______-Most common type of economic system. Government and individuals share the decision making process. Individuals and businesses make decisions for the private sector. Individuals own the means of production. Government makes plans for the public sector. Government guides and regulates production of goods and services offered. A greater government role than in a free market economy. Most effective economy for providing goods and services. Ex. U.S. and most Western European countries are mixed economies
  10. ______-Also known as capitalism or free enterprise. Private ownership of property and resources Individuals and businesses make profits. Individuals and businesses compete. Economic decisions are made by supply and demand. Profit is a motivator for productivity. No government involvement. Consumer sovereignty: buyers determine what is produced.

•______-We compete for the use of limited resources. 2 ways of competition: Price competition, Non price competition e.g. waiting, examination, lucky draw, violence…

•______: anything that goes into the making of a good or service. Ex. Capital Ex: tools, machinery, money and technology. Entrepreneur-Business owner and risk taker combines the factors of production. Land-Natural Resources, Labor-Workers and their time and energy

  1. Business Organizations-The 15 million businesses in the U.S. fall into three categories:
  2. ______-1 owner,The owner takes all the risks,Supplies capital, hires help, pays taxes, The owner makes all the profits, and The owner is solely responsible for losses
  3. ______-More than one owner (2+), Risks are shared amongst the owners, Profits are shared amongst the owners, and Often more successful than sole proprietorships because Responsibilities are shared.
  4. ______-Owned by stockholders, Authorized to act as a legal person regardless of the number of owners, Owners share the profits, Liability is limited to investment (you can only lose as much as you put in),Raise money by selling stocks so No one is responsible for corporation’s debt if it fails
  5. ______: In economic terms, wealth transfer from businesses or households to the government occurs by use of taxation.
  1. ______: to raise money to spend on hospitals & schools, roads and government functions like justice system.
  2. ______: Transfer of wealth from richer sections of society to poorer sections.
  3. ______: Taxes imposed to influence society; taxation on tobacco
  4. ______: direct taxation for higher degree of accountability & better governance.
  1. Types of Taxes: Income, ______, Self-employed businessperson or independent, Contractor, Business, ______, Utility, Lodging/Restaurant, ______

Theories of Economics, US Economic Policy, Economic Indicators, and the Global Economy

  1. Economic Theories: Neo-Classical (______), Keynesian (John Maynard ______), Monetarist (Milton Friedman, Friedrich August Von ______)
  1. Neo-Classical: Adam Smith argues that it was market forces that ensured the production of goods and services, ensuring profit. A _____environment would increase competition and keep costs down. All this can be done without GOVERNMENT ______
  2. KEYNESIAN THEORY: Keynesian economics is a theory suggested by John Maynard Keynes in which government spending and taxation is used to ______the economy. This theory is also called fiscal policies or ______ECONOMICS.
  3. MONETARIST THEORY: ______are a group of economists so named because of their preoccupation with ______and its effects. The role of government is simply to use its monetary policy to control inflation and supply-side policies to make markets work better and reduce _____unemployment______. Monetarists include Milton ______andFriedrich August von ______.
  1. U.S. Economic Policy
  1. Maintaining ______in the marketplace is the basis of the free-enterprise system. Government plays a limited but important role in the protection of individual economic freedoms.
  2. Individuals have the right to the basic economic freedoms enjoyed in a free market society. The government is responsible for protecting these ______
  3. Economic freedoms of individuals
  1. Ability to ______
  2. Right to purchase______
  3. Right to spend incomes on ______
  4. Right to choose occupations or ______
  5. Right to make choices about where and how much to ______
  6. Right to start new ______
  7. The government has created certain ______laws and agencies.
  1. A strong relationship exists between the economic and political freedoms enjoyed by citizens of free and ______nations.
  2. The degree of economic freedom in a nation tends to be directly related to the degree of ______its citizens enjoy.
  1. ______nations
  1. High degree of economic freedom
  2. High degree of political freedom
  1. ______nations (Autocracies)
  1. Limited economic freedom
  2. Limited political freedom
  1. Formulation of economic policies requires an understanding of accurate ______of the economy’s performance.
  1. Economic ______
  1. Advance Monthly ______
  2. Advance Report on ______
  3. ______Spending
  4. Current ______
  5. Manufacturers’ ______, Inventories, and Orders
  6. Manufacturing and Trade Inventories and ______
  7. New ______
  8. New Residential______
  9. Personal Income and ______
  10. Wholesale______
  11. ______(GDP) is the total dollar value of all final goods and services produced in a year.
  12. ______measures the monthly price changes of sample consumer goods and services.
  13. ______rate is the percentage of the labor force without jobs.
  14. ______is the difference in dollar value between imports and exports.
  15. ______averages are select groups of stocks whose performance is averaged, and over time, the averages serve as an indicator for the market.
  16. ______is the amount of output per unit of input over a period of time.Productivity and the standard of living are generally higher in economies that have limited government planning and limited control of the economy.
  1. _Monetary and Fiscal_ Policies
  1. Two major ______for influencing economic activity are monetary and fiscal policies.

1Changes in fiscal and monetary policies can ______or ______the economy.

2 . The Federal Reserve System serves as the United States ______.

  1. The Federal Reserve Board controls monetary policy by changing the availability of ______funds and/or adjusting ______.
  2. Three instruments of monetary policy are ______requirements, ______rates, and open-market operations.
  3. The government can use fiscal policies such as changes in ______, changes in ______, and the issue of government ______to influence economic activity.
  4. Many _____ and services would not be available if they were not provided by the government.
  5. Government-provided public goods and services, sometimes called “_____” goods and services, benefit many but would not be available to everyone if individuals had to provide them.
  6. Taxes and/or fees pay for the production of government-provided goods and services.
  1. ______
  2. Public ______
  3. Public ______
  4. Reasons why government provides public goods and services
  1. It is more ______.
  2. The goods or services may benefit everyone, not only a ______.
  3. The value of the goods or services is greater than individual consumers could afford.
  4. It promotes economic ______.
  1. Government ______

A. The United States government creates laws and agencies to regulate ______and exchange activities, conduct ______, and establish ______for consumer rights and safety. The government can also intervene in ______relations and can regulate competition in the marketplace.

  1. Government agencies created to protect consumer safety and against ______and deception
  1. The Consumer Product Safety Commission ensures safety of products other than ______, drugs, and ______
  2. The Food and Drug Administration ensures the safety of food, ______, and cosmetics
  3. The government can intervene in labor-management relations and can regulate ______in the marketplace.
  4. Protecting the ______is a public service.

a The government sets regulations and levies fees to ensure that the producer pays all______resulting from ______. The government also subsidizes pollution reduction efforts.

  1. Property rights of an individual are relative and______.

a Individuals have the right of private ______, which is protected by negotiated contracts that are enforceable by law. However, the rights of a society as a whole rank above those of the individual.

  1. Contracts are legally ______.

a Individuals enter into agreements (contracts) with one another to buy and sell goods and services. Whether written or______, these agreements are legally______.

  1. The Global Economy

A.Democracy and ______go hand in hand as they both promote ______.

1.With_____technology______, trade extends beyond our borders most of the time.

2.______trade affects everyone everywhere.

3. The global economy deeply affects national ______and ______.

4.Recently, industrial ______is the most powerful form of ______.

B The economies of individual nations are ______.

1.The economy of the United States depends on _____and markets around the world for the production and sale of goods and services.

2.Total world ______is greater when nations ______in the production of those products that they can produce most ______.

3.United States businesses have become ______in their quest for productive resources, markets, and profits. United States firms may move factories to other countries to reduce costs (_off-shoring_).

4.International trade provides ____ and the United States with goods and services for which they do not possess ______or ______advantage.

  1. Virginia and the United States benefit when they produce goods and services for which they have a comparative advantage, and trade for other items.
  2. Advances in______allow businesses to get skilled work, such as engineering and accounting, done by people who remain in their home countries (i.e., to outsource this work). This increases the supply of workers and holds wages and costs of production down. ______brings workers into the country and increases the supply of ______.
  1. Making foreign policy decisions requires balancing competing or ______foreign policy goals.

1.As foreign countries develop and grow, they _demand___ more products and natural ______, such as oil, pushing up prices.

2.When the United States imports more goods and services than it exports, the ____ is the trade ______.

3.Canada,___ __, the European Union, ______, and Japan are the major trading _____partners______of the United States.

4.Global Partnerships

  1. European ______
  2. North ______Agreement
  3. Obama’s Initiative in the Far ______