Transcript File - Ms. Perez-Family and Consumer Sciences

Economics
Ms. Perez
Bell ringer:
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What role do you play in today
economy?
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Do you contribute to it? How?
Personal economics
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The study of the roles people play in an
economic system
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Worker
Citizen
Consumer
What are some economic
choices that you make?
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What you buy?
What you save?
What do you WANT to buy?
What do you NEED to buy?
You make choices economic choices
EVERYDAY!
Resources
Land
 Labor
 Capital
Entrepreneurship
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You need money for these resources
$$$$
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Land---> Rent
Labor---> Wages
Capital---> Interest
Entrepreneurship---->Profits
Freedom of choice
Right of the buyer to decide how to spend
their money
Known as supply and demand
Economics

Study of the process that involves
CHOICE making as people need to
satisfy their WANTS vs. their NEEDS.
Economic systems
Traditional
 Command or controlled
 Capitalist or market
 Mixed system
Table 1- Traditional
Table 2-Command or controlled
Table 3- Capitalist or market
Table 4- Mixed system
Table 5-Break up among tables
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Bell ringer:
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Based on presentations yesterday,
which type of economic system is the
U.S.?
7th hour
Table 1- Traditional
Table 2-Command or controlled
Table 3- Capitalist or market
Table 4- Mixed system
Table 5-Traditional
Table 6-Command or controlled
Table 7- Capitalist or market
Table 8-Mixed system
Read your section on page
21-22
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Write a summary of the system
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List 3 advantages and 3 disadvantages of
the system
You will have 10 minutes to do this
The United States
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Mixed system
Owner could open a factory in Illinois and hire 50
people but he must pay them minimum wage
and operate factory according to safety features
determined by the government.
Gross domestic product

Total value of ALL final goods and
services in an economy

Consumer spending+government
spending+ business investments + Foreign
trade=GDP
GDP-Is it counted and
where?

Get out a piece of paper and number it
1-6
Write down if this is an
example of
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C if the item is counted as consumer
spending
I if the item is counted as business
investment
G if the item is counted as government
spending
F if the item is counted as foreign trade
N if the item is not counted
1.
You spend $5 to attend a movie
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C if the item is counted as consumer
spending
I if the item is counted as business
investment
Gif the item is counted as government
spending
F if the item is counted as foreign trade
N if the item is not counted
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2. The government increases its military
expenditures by $1 billion.
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C if the item is counted as consumer
spending
I if the item is counted as business
investment
G if the item is counted as government
spending
F if the item is counted as foreign trade
N if the item is not counted
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3. You buy General Motors stock for $1000 on
the stock market.
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C if the item is counted as consumer
spending
I if the item is counted as business
investment
G if the item is counted as government
spending
F if the item is counted as foreign trade
N if the item is not counted
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4. A housewife does a lot of work caring for
her husband and two kids.
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C if the item is counted as consumer
spending
I if the item is counted as business
investment
G if the item is counted as government
spending
F if the item is counted as foreign trade
N if the item is not counted
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5. You pay tuition to attend an economics
course.
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C if the item is counted as consumer
spending
I if the item is counted as business
investment
G if the item is counted as government
spending
F if the item is counted as foreign trade
N if the item is not counted
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6. You pay $300,000 for a house built 3 years
ago.
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C if the item is counted as consumer
spending
I if the item is counted as business
investment
G if the item is counted as government
spending
F if the item is counted as foreign trade
N if the item is not counted
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Consumer Price Index
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Change in price over time of a specific
group of goods and services that are
used by average people
Also called cost of living
Example:
Cost of milk in 1980 was $2.16
Cost of milk in 2011 is $3.36
Inflation
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When price increases
Dollar can’t buy as much
What causes inflation?
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Inflation is caused by change in interests
Surging economy
Inflation effects?
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Who is helped by inflation?
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Who is harmed by it?
Helped or harmed?
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A family that bought a house and has a
fixed interest rate mortgage
Helped!
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Helped—mortgage payment doesn’t
change. Same house would cost more
today
Helped or harmed?

A retired person who lives on fixed
interest from bank certificates of deposit
(CDs)
Harmed

Can’t buy as much with fixed income
Helped or harmed?

The federal government, which has a $4
trillion debt?
Helped

Debt total doesn’t hold as high of a
value
Helped or harmed?
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A retired teacher whose income comes
from a fixed income pension?
Harmed
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Same amount of money
Helped or harmed?
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A savings and loan which has many
fixed interest rate mortgages
outstanding?
Harmed
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Taking in same amount of money & it is
not worth as much
Helped or harmed?
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A two income family. The wife is a
medical doctor, and the husband is a
financial analyst?
Neither
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Their salary will go up and so will prices
TOTD
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On the same piece of paper where you
wrote your response to the GDP
questions and the inflation questions
write this down
Write down one example of a group that
would be helped or harmed by inflation.
Identify if this group has been helped or
harmed
Bell ringer:
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Identify if this is part of the GDP and where it
is counted?
General Motors buys new car-making robots
C if the item is counted as consumer
spending
I if the item is counted as business
investment
G if the item is counted as government
spending
F if the item is counted as foreign trade
N if the item is not counted
The GDP is one way to
measure the business cycle
Business cycle
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Swings up and down in GDP
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Prosperity/Peak
Recession/Contraction
Depression/Trough
Recovery/Expansion
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The Business cycle-Copy
down chart
45
Prosperity/peak
40
35
30
Recovery/
expansion
Recession/
contraction
25
20
15
10
5
Depression/trough
0
1
2
3
Years----->
4
5
6
7
8
9
10
11
12
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http://www.youtube.com/watch?v=MHP
UdvKi7dc&feature=related
As a group create someway
to demonstrate 1 point in the
business cycle
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Rap
Scenario/skit
Prosperity, Recession, Depression
Or Recovery,
 Extra credit- if you include more then
one

As a group create a story,
skit, song/rap that
demonstrates 1 stage in the
business cycle
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Story
Rap
Scenario/skit
Prosperity, Recession, Recovery, and
Depression
Extra credit if one then 1 is represented
Group share!
Global Economy
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Does what’s happening in the rest of
world effect the US?
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How?
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9/11
Gas prices
Job security
Inflation
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Value of the dollar
Global Economy
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Why is this international trade so
important?
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Think about those things we would not
have?
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Think about things that other countries
wouldn’t have?
Global Economy
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Have computers changed the way
business is done?
Computers have changed
Global business
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Speed in the office
elimination of jobs because of efficiency
Creation of computer jobs
Internet-global business in seconds
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Doing business with people you may not
have
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Skype meetings
Which countries do you think
are the most economically
stable?
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Why?
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U.S., Great Britain, Germany, Japan,
France and Canada
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Production, technology, lots of jobs,
good governments