Transcript Goal 9 PPT

Goal 9
Factors Influencing the US Economy
The Business Cycle
• Expansion (economic
recovery)
• Peak (highest point,
means prosperity)
• Contraction (fall in
economy)
• Trough (lowest point,
can be recession or
even depression)
Economic Indicators - GDP
• Above example is US GDP (calculates total
value of all goods and services in the
economy
• Per Capita GDP – calculates number of goods
produced per person (great at figuring out
standard of living)
Economic Indicators - GNP
• Gross National Product calculates goods
produced by US companies
Economic Indicators - Consumer
Price Index
• CPI
measures
monthly
changes in
the cost of
goods by
monitoring
goods that
are
typically
bought by
consumers
Economic Indicators - National
Debt
• National
Debt is
the
amount
of money
owed by
the
federal
gov’t
Government Regulation
• Environmental
Protection through the
EPA
• OSHA and CPSC are
concerned with safety,
workplace and
consumer respectively
• Affirmative Action
(giving minorities
candidates a better
opportunity for jobs)
is enforced
• Labor Disputes are
often dealt with by
government
Government Deregulation
• The government will sometimes deregulate
(take regulations away from the
government) an industry to encourage
competition
• An example of this is when Jimmy Carter
deregulated the airlines, making it more
competitive and made the airlines have to
provide better stuff than their competitors
What impacts Resources – Sort
of New Stuff so LOOK AT THIS
Immigration (people
coming into the US
from another country
Migration (people
moving within the US)
Leaving of the Rust
Belt (Northeast US
area that held
manufacturing jobs)
Leaving of the Frost
Belt (Upper North like
Montana that held
manufacturing jobs)
Settling in the Sun Belt
(Area of South
including NC that hold
new jobs for people)
Settling in Silicon
Valley (northern
California’s high tech
computer hub)
Settling in Research
Triangle Park
(Raliegh’s high tech
research and
development area)
Automation has
replaced workers in
manufacturing areas in
the North
Service Industries have
increased and provided
new jobs for workers
Current Events that Affected US
Economy
• The War on Terror and 9/11
• The Department of Homeland Security
created to deal with terrorist threats
• Patriot Act increases law enforcement’s
ability to investigate people
• Operation Iraqi Freedom and Afghanistan
invasion
Legal and Economic Events
Affecting the US Economy
• Legal Event is
Microsoft Case in
2001 – government
told Microsoft to
break into other
companies and stop
it’s monopoly, but
Microsoft appeals and
somewhat wins case
• Economic Events:
1) Downsizing – reducing
employees and production
2) Outsourcing – sending
jobs oversees
3) NC Textile and
Furniture Industries have
been especially hit by
downsizing and
outsourcing
International Trade
• Multinational Conglomerates own a variety
of countries in more than one nation
• Globalization is a worldwide connection of
businesses
• Interdependence is when countries rely on
each other for products
• These three things dominate international
trade today
Balances of Trade
• If imports are greater
than exports:
1) Trade Deficit
(money is lost through
trading)
2) Unfavorable
Balance of Trade
• If exports are greater
than imports:
1) Trade Surplus
(money is gained
through trading)
2) Favorable Balance
of Trade
Who Should Produce a Good?
• Absolute Advantage says one country can produce
more of a good than another country can
• Comparative Advantage says one country can
produce a good more efficiently than another
country can
• Law of Comparative Advantage says that the
country with the greater Comparative Advantage
produces the good
Factors When Trading
Exchange Rates
(converting one currency
into another currency of
another nation)
Free Trade (no barriers)
v. Embargoes (preventing
another country from
trading)
Tariffs (taxes on goods
from another country,
raises prices of foreign
goods in a country and
therefore helps home
business), Import Quotas
and Export Restraints
Treaties (formal
agreements between
nations) including WTO,
EU, IMF, UN, and
NAFTA to trade freely
Global Problems
• Giving foreign aid to
developing countries (not
developed)
• The World Bank provides
council and finances to
poorer countries that need
it
• US helps because it
provides more markets,
helps country stability, and
we have a moral duty
• Political concerns
include:
1) Human Rights
Issues
2) Child Labor Laws
3) Examples would be
Cuba and China
Monetary v. Fiscal Policy
• Fiscal Policy
1) Taxation (including
proportional,
regressive, and
progressive taxes)
2) Spending (looking
at revenue from taxes
and deciding how to
prepare federal
budget)
• Monetary Policy
1) Federal Reserve creates
reserve requirements
(banks keep certain
amount of money)
2) Discount Rates or
Interest Rates (percentage
of money one must pay a
lender in exchange for
loan)
3) Open Market
Operations (selling or
buying stuff as the Fed)
Economic Conditions
• Scarcity is a problem (OPEC oil embargo creates
scarcity of oil in 1973, just like Katrina in 2006)
• Inflation, or even Stagflation, forces people to cut
back on what they spend
• The Stock Market can be a “bull market” (doing
well) or a “bear market” (doing poorly) and
determines whether people will invest or spend
money
Environmental and Political
Factors
• Environmental:
1) Clean Air Act and
Clean Water Act
2) Government restricts
economic development to
protect environment
(Alaska oil drilling for
example)
3) Government enforces
pollution standards
• Political:
1) OPEC imposes
embargo on oil in the
Middle East
2) Embargo against Cuban
goods
3) Zoning Laws and
Building Codes prevent
certain economic
development
4) NIMBY and YIMBY
affect economic
development