Transcript Monopolies - Currituck County Schools

Economic
Policy
An Overview of
Chapter 23
Pop Quiz 23
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Comparing Terms
Macroeconomics
Microeconomics
• Deals with broad &
• Deals with specific
general aspects
aspects of one part of
of an economy, as the
an economy, like
relationship between
households,
income &
businesses, individuals,
investments of a country
etc.
as a whole.
• Measures the income,
• Measures the national
profits, and well-being
economy: GDP, inflation, of a particular group.
unemployment, etc.
Monopolies
• What is a monopoly?
• Why are monopolies “bad” for
consumers?
– Artificially high prices
– No substitutes for good or service
– No incentive to stop poor service or quality
• Adam Smith believed one of the few roles
of government in an economy was to keep
competition fair.
Government Intervention
• Sherman Anti-trust Act made monopolies
that intentionally hurt competition illegal.
• Clayton Anti-trust Act gave the federal
government the power to break up illegal
monopolies.
• The Federal Trade Commission has the
authority to fine, regulate, and even break
up businesses that act like monopolies.
They must approve mergers of businesses.
• So do monopolies still exist? YES!
Natural Monopolies
• Exist because seller has a
unique product or idea.
• Examples?
Government Monopoly
• Run by or exist by the
permission of the federal
government.
• Examples?
Geographical Monopolies
• Exist due to the fact that no
other competition is in area.
• Examples?
Technological Monopolies
• Exists due to patents and
copyrights or because
competition cannot replicate
idea.
The Business Cycle
Economic Indicators
• GDP is the total dollar value of all
FINAL GOODS produced in a
country in a year.
• Not affected by inflation (Real GDP)
• Inflation can affect GDP (ex. Gas
prices)
• CPI (consumer price index)
Economic Indicators
• Unemployment is the total # out of
work actively seeking a job
– Full employment is around 4%
– Highest unemployment was 33% during
the Great Depression
• Unemployment is gauged by the
number of people applying for benefits.
• Unemployment has an impact on many
other economic indicators.
Controlling the
Economy
Fiscal Policy
Controlling taxing and spending by
the government to influence the
economy. Affects incomes,
services, benefits & spending.
Fiscal policy is controlled by the
President and Congress.
Affecting the
Economy
• How does a rise in taxes effect the
economy? Explain.
• How does an increase in government
spending (such as on programs like
building bridges, schools, or roads)
effect the economy? Explain.
• Using the above examples, how does
the government use fiscal policy to
affect the economy?
Types of Taxes
Individual
Corporate
49%
33%
Social Insurance
Excise
Estate/Gift
9%
Miscellaneous
Custom Duties
The Current National Debt
http://www.brillig.com/debt_clock/
Who is ultimately responsible for
our National Debt?
• Presidents make the budget.
• Congress approves the budget.
• People demand services, low
taxes.
How the Debt Increases
Public Assistance
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Public Education
TANF
WIC
SSI
Social Security
Food Stamps/EBT