Transcript Changes in Demand - cartee

Unit 7
Economics
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.
Words to Know:

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)
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


Want: something that is desired


Examples:
Good: a tangible product


Examples:
Examples:
Service: a treatment (you cannot touch it!)

Examples:

Consumer: a buyer


Producer: The seller


Examples:
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
Questions
What
How
For
to produce?
to produce?
whom to produce?
THE FACTORS OF
PRODUCTION
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:
 Oil
 Timber
 Land
 Crops
 Natural gas
 Milk
2 Types of Natural Resources

RENEWABLE


Can be replaced or
renewed or recycled
ex: wood, water,
crops

NONRENEWABLE


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 laborhighest 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
programs
 Skills development
 Advanced degrees
Entrepreneurs

People who RISK
time and money
($) to start their
own business and
organize the other
factors of
production.

Examples:
 P. Diddy
 Lemonade
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
Units of food (millions)
A Production Possibilities
Curve
8
7
6
5
Units of food Units of
clothing
(millions)
(millions)
4
8m
7m
6m
5m
4m
3m
2m
1m
0
3
2
1
0.0
2.2m
4.0m
5.0m
5.6m
6.0m
6.4m
6.7m
7.0m
0
0
1
2
3
4
5
6
7
Units of clothing (millions)
8
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 300using 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
customs
by tradition, ancestors,


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
Demand
The desire to own
something and the
ability to pay for it!
The Law of Demand
 The
Law of Demand states
that as prices decrease
people are willing/able to
buy more. As price increases
people are willing/able to
buy less.
Inverse/opposite relationship
P
D
P D

Demand Schedule

Price
Quantity
$5.00
100
$10.00
70
$15.00
50
$20.00
30
$25.00
20
$35.00
10
Demand Curve



Graphic representation
of the demand schedule.
y-axis = price
x-axis = quantity
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 Increases
Effect on Demand
 Demand
Increases
 (shift right)
P
D1
Q
D2
Bad Weather (for product)
Effect on Demand
 Demand
Decreases
 (shift left)
P
D2
Q
D1
Substitutes!
Compliments
Substitutes!
Compliments!
Substitutes!
Substitutes!
Compliments!
Price of Complementary Good Decreases
ex: peanut butter & jelly
Effect on Demand
 Demand
Increases
 (shift right)
P
D1
Q
D2
Price of Substitute Good Decreases
ex: Pepsi & Coca-Cola
P
Effect on Demand
 Demand
Decreases
 (shift left)
D2
Q
D1

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
100
$1.00
150
$1.50
200
$2.00
250
$2.50
300
$3.00
350
Supply Curve: Graphic representation of
the supply schedule. (rises from left to
right)
 y-axis = price x-axis = quantity
supplied

Shifts in Supply
1.
2.
WHY WOULD THERE BE A CHANGE IN
SUPPLY?
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.
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 Decrease
Effect on Supply
P
 Supply Increases

S1
S2
(shift right)
Q
Number of Suppliers Increases
Effect on Supply
P
 Supply Increases

S1
S2
(shift right)
Q
Weather is bad for product
Effect on Supply
 Supply
Decreases

P
S2
S1
(shift left)
Q

Elasticity of Supply is a measure of
the way suppliers respond to a
change in price
 Elastic
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 #1
Dick’s Sporting Goods and Academy goes
out of business. What is the impact on
basketballs in Charlotte?
-number of suppliers changes
-Supply Decreases
Situation #2
A hurricane destroys the orange groves in
Florida. What is the impact on the supply
of Orange Juice?
-weather changes
-Supply Decreases
Situation #3
The price of gas decreases. What is the
impact of trucking companies?
-cost of inputs change
-Supply Increases
Situation #4
Nike 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
S1
P
Equilibriu
m Point
E1
P1
Market
Clearing
Price
D1
Q1
Q
Excess Demand (SHORTAGE): when
quantity demanded is more than quantity
supplied
S1
P
Price is too low!
 not enough!

E1
P1
D1
QS
QD
Q
Excess Supply (SURPLUS): when quantity
supplied is more than quantity demanded
S1
P
Left-overs
P
 Price is too high!

1
E1
D1
QD
QS
Q

A shift in the demand curve or the
supply curve will result in a new
equilibrium price.
Orange Juice
S2
P
P2
PRICE ____
S1
E2
QUANTITY____
E1
P1
BECAUSE OF A
CHANGE IN
D1
Q2
Q1
Q
SUPPLY
Coca-Cola
PRICE ____
S1
P
QUANTITY____
E1
P1
BECAUSE OF A
CHANGE IN
E2
P2
D2
Q2
Q1
D1
Q
DEMAND
Video Games
PRICE ____
S1
P
E2
QUANTITY____
P2
P1
E1
BECAUSE OF A
CHANGE IN
D1
Q1
Q2
Q
D2
DEMAND
Clothing
PRICE ____
S1
P
S2
QUANTITY____
P1
E1
BECAUSE OF A
CHANGE IN
E2
P2
D1
Q1
Q2
Q
SUPPLY
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
S1
P
E1
MCP
Price Floor
D1
Q
Price Ceiling
S1
P
Price
Ceiling
E1
MCP
D1
Q
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

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 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
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 selfinterest 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




Easy to start
Sole receiver of profit
Full control
No additional taxes
Disadvantages
- Unlimited Liability
- Limited Life
Partnership

Description


a business organization owned by two or more
persons
Advantages



Easy to start
Specialization
No additional taxes
Disadvantages
- Share Profits
- Unlimited liability
- 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

Built-in reputation

Limited Liability
Disadvantages
- Loss of freedom &
decision making
Non-Profit
A business that operates under a plan that
distributes the profits made to other
charitable organizations.
 Advantages
Disadvantages
Tax Exempt
Relies on charity
Provides Services
Follows Market

Multinational Corporations

Definition – a large corporation that
produces and sells its goods and services
throughout the world

Advantages



Provides jobs &
products around the world
conditions
Spread new technology
around the world
Increases standard of living
in many poor countries
Disadvantages
-Low wages
-Poor working
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 Sector
 Provides
LABOR to the
FACTOR MARKET
 Purchases
GOODS &
SERVICES from the
PRODUCT MARKET.
Business Sector
 Receives
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.
The circular flow of goods and incomes
fig
The circular flow of goods and incomes
Goods and services
fig
The circular flow of goods and incomes
Goods and services
$
Consumer
expenditure
fig
The circular flow of goods and incomes
Goods and services
$
Consumer
expenditure
fig
Services of factors of production (labor, etc)
The circular flow of goods and incomes
Goods and services
$
Consumer
expenditure
Wages, rent
dividends, etc.
$
fig
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
Economic Indicators
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
 Expansion:
a
period of economic growth
 real GDP rises
 Employment increases
 Production increases
 Money supply increases
 Consumer spending increases
 Prices increase (INFLATION)
 Peak:
 The
highest point in the
business cycle
 Full Employment
(those who want a job have a
job)
 Production at full capacity
 Money supply high
 Consumer spending high
 Prices high
•
Contraction:
– a period of economic decline
– real GDP declines
– Employment decreases
– Production decreases
– Money supply decreases
– Consumer spending decreases
– Prices decrease (DEFLATION)
– Long contraction (6 months)
called a RECESSION
 Trough:
 The
lowest point in the business
cycle
 High rates of unemployment
 Production nearing a standstill
 Money supply low (limited
lending)
 Consumer spending low
 Prices low
 Long period (1 yr.) called a
DEPRESSION
Building permits- indicates construction
activity
6. Manufacturers’ new orders- predicts
actual production change
5.
7.
Consumer Price Index
- measures the
rate of change in the price of 400 consumer
goods
December 17, 2013
Grab a MAP!
The Stock Market
Buying Stock:
 Corporations sell stock to raise funds.
Stock represents ownership in the
corporation and is issued in portions called
shares.
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: Inflation
Occurs 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: Unemployment
Occurs 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: Inflation
Occurs 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: Unemployment
Occurs 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, frostproducing 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 hightech 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.