Transcript OBJECTIVE

Why Semester Economics?
Using the principles
discussed in this unit,
you’ll be able to
describe the financial
world around you and
make sound personal
and business decisions.
It’s also a required course
But WHY is it required?
Because Studying ECONOMICS . . .
•
Helps You to Decide Who to Vote For in
an Election
•
Helps You to Understand Your Boss’
Thinking
•
Helps You to Make Money Every Day
The Benefits of Studying ECONOMICS
•
Helps You to Understand World News
•
Helps You Participate in Our System, and
•
Helps You to Spend Your Money Wisely
The Benefits of Studying ECONOMICS
But, these young folks from over the pond
say it best . . . .
https://www.youtube.com/watch?v=0Yto5fz5Zok
For more on “Why Study Economics”
http://whystudyeconomics.ac.uk/
OBJECTIVE
Be Able to Define Economics
ECONOMICS
The Process of
Making Decisions to
Satisfy Unlimited
Wants & Needs Using
Limited Resources
ECONOMICS
The Process of Making
Decisions to Satisfy
Unlimited Wants &
Needs Using Limited
Resources
ECONOMICS
The Process of Making
Decisions to Satisfy
Unlimited Wants &
Needs Using Limited
Resources
What the Heck
Does That Mean?
ECONOMICS
•
The Process of
•
Making Decisions
•
To Satisfy
•
Unlimited Wants & Needs
•
Using Limited Resources
ECONOMICS
All Together Now,
Say It With Me. . . .
“The Process of Making Decisions To
Satisfy Unlimited Wants & Needs Using
Limited Resources.”
ECONOMICS
“The Process of Making Decisions To
Satisfy Unlimited Wants & Needs
Using Limited Resources.”
 But how could you state this
definition more simplistically?
ECONOMICS
•
Economics is
Making
Decisions So
That I . . .
ECONOMICS
Economics is
Making
Decisions So
That I . .
Get the
Most for
the
Least!!!
ECONOMICS
Economics is
Making
Decisions So
That I . .
We Get the
Most for
the
Least!!!
Crash Course Economics
Starting at 1:50
https://www.youtube.com/watch?v=
3ez10ADR_gM
End at 3:16
What Are Your Economic Decisions?
•
Should I Get Out of Bed in the Morning?
•
What Classes Should I Take?
•
What Type of Car Should I Buy?
•
What’s For Dinner?
•
Who Should I Vote For?
EPF 1 - The student will
demonstrate knowledge of
basic economic concepts and
structures.
What Are Your Economic Decisions?
Seed Question
What is an economic
decision you have had to
make in your life?
Three Important Economic Concepts
Rewards
Costs
Decisions
Three Important Economic Concepts
Rewards - Benefits
(What I Get Out Of It)
Costs
- What Resources I Give Up
(Also Called “Trade Offs”)
Decisions - Our Choices
OBJECTIVE
Be Able to Provide Examples of . . .
Benefits
Economic Resources
Benefits
What a Decision Will Do For Me:
(Make Me $$$ for example)
Benefits
What a Decision Will Do For Me
(Give me a Sense of Relaxation)
:
Benefits
What a Decision Will Do For Me:
(Give Me Joy)
Benefits
What a Decision Will Do For Me:
Give Me Personal Satisfaction
Benefits
What a Decision Will Do For Me:
Give Me Confidence
Benefits
What a Decision Will Do For Me:
Recognition By My Peers
Three Economic Resources
LAND
LABOR
CAPITAL
&
Three Economic Resources
LAND
Natural Resources
LABOR
People with Skills
CAPITAL
Money or things . . .
&
Fourth Economic Resources???
ENTREPRENEURS
LAND
Natural Resources
LABOR
People with Skills
CAPITAL
Money or things . . .
&
Fourth Economic Resource???
ENTREPRENEURS
LAND
People Who Own & Operate
Their Own Business
Natural Resources
LABOR
People with Skills
CAPITAL
Money or things . . .
&
Fourth Economic Resource???
ENTREPRENEURS
People who own & operate their own business
These 4 things together =
“The Factors of Production”
LAND
Natural Resources
LABOR
People with Skills
CAPITAL
Money or things . . .
&
Economic Resources
ENTREPRENEURS
People who own & operate their own business
What makes these resources
particularly valuable is their
LAND
Natural Resources
LABOR
relative scarcity
People with Skills
CAPITAL
Money or things . . .
&
Economic Resources
ENTREPRENEURS
People who own & operate their own business
LAND
What makes these resources
particularly valuable is their
Natural Resources
LABOR
relative scarcity
People with Skills
CAPITAL
Money or things . . .
&
means that we do not have
enough resources to satisfy
all our wants and needs.
What Are Your Economic Decisions?
Seed Question
What in your life would you describe as your
economic resources, desired rewards, and
most difficult to give up costs?
Other Important Economic Concepts
Opportunity Costs - the loss of potential gain from
other alternatives when one alternative is chosen
Unintended Consequences - outcomes that are not the
ones foreseen and intended by a purposeful action
Other Important Economic Concepts
Marginal Benefits - the additional satisfaction or utility
that a person receives from consuming an additional
unit of a good or service
Marginal Costs - the cost added by producing one extra
item of a product.
QUESTION
How Does a Country
Make its Economic
Decisions?
ANSWER
Through the Use of an
Economic System
ANSWER
Through the Use of an
Economic System (or Process Perhaps?)
OBJECTIVE
Be Able to List the Three Basic
Economic Questions Every Country’s
Economic System Must Answer
Three Basic Economic Questions
•
What Should We Produce?
•
How Should We Produce?
• Who Gets What We Produce?
OBJECTIVE
Be Able to List the Three Basic
Economic Questions Every Country’s
Economic System Must Answer
They’re not much
different than the
questions you have
to make in your
own life
OBJECTIVE
Be Able to List the Three Basic
Economic Questions Every Country’s
Economic System Must Answer
But we’re going to look at
the questions from a
much larger perspective,
from that of an entire
country’s and that
country is called . . .
OBJECTIVE
Be Able to List the Three Basic
Economic Questions Every Country’s
Economic System Must Answer
(The Kingdom of Mocha)
https://www.youtube.co
m/watch?v=SSYmVKsHt
nU&list=PL6s6uQx1l0AN
tV-Anm51nGxiIpMZdmJp
OBJECTIVE
Be Able to List the Three Basic
Economic Questions Every Country’s
Economic System Must Answer
(In the Kingdom of Mocha)
Seed Question: In the Kingdom, . . .
What did the residents produce?
How did they produce?
Who received what they produced
OBJECTIVE
Be Able to ANSWER the Three Basic
Economic Questions Every Country’s
Economic System Must Answer
(On Your Own Island)
Seed Question: In your Kingdom, . . .
What will the residents produce?
How will they produce?
Who will receive what they produced?
OBJECTIVE
Be Able to ANSWER the Three Basic
Economic Questions Every Country’s
Economic System Must Answer
(On Your Own Island)
Seed Question: In your Kingdom, . . .
TOUGH CALL?
But that’s essentially
what we’re asking our
government to do,
answer these questions!
What will the residents produce?
How will they produce?
Who will receive what they produced?
OBJECTIVE
Be Able to Identify the Three
Primary Economic Systems
Used in the World Today
Economic Systems of the World
•
Free Enterprise
• Capitalism
• Market Economy
•
Socialism
• Mixed Economy
• Democratic Socialism
•
Communism
• Planned Economy
• Command Economy
OBJECTIVE
Be Able to Describe the
Important Characteristics of
Each Type of Economic System
Important Characteristics of All Economic
Systems
Allowance for Business Ownership
Important Characteristics of All Economic
Systems
Production of Consumer Products
Important Characteristics of All Economic
Systems
The Amount of Competition
Important Characteristics of All Economic
Systems
The Amount of
Employment Available
Important Characteristics of All Economic
Systems
Private Property Rights
Important Characteristics of All Economic
Systems
Profit Potential
Important Characteristics of All Economic
Systems
Social Services Available
OBJECTIVE
Using the Important
Characteristics of All Economics
Systems, Describe Each
Economic System
Primary Economic Systems
Ownership
Communism
Socialism
Free
Enterprise
Consumer
Products
Competition
Employment
Private
Property
Profit
Social
Services
Primary Economic Systems
Ownership
Communism
Socialism
Free
Enterprise
Consumer
Products
Competition
Employment
Private
Property
Profit
Social
Services
Using a loose leaf sheet of paper,
make a chart like this one please.
Turn the paper so it offers a
“landscaped” (sideways)
orientation .
OBJECTIVE & ASSIGNMENT
Based on your chart, be
able to identify two
advantages & two
disadvantages of each
economic system
QUESTION
What Economic System
Do We Use in This
Country?
ANSWER
The Free Enterprise System
ANSWER
The Free Enterprise System
As described by Adam Smith in
The Wealth of Nations
ANSWER
The Free Enterprise System
As described by Adam Smith in
The Wealth of Nations
https://www.youtub
e.com/watch?v=ojYq
v9TmZbM
ANSWER
The Free Enterprise System
As described by Adam Smith in
The Wealth of Nations
Three Major Points
Division of Labor
The Nature of Wages
Foreign Markets
ANSWER
The Free Enterprise System
As described by Adam Smith in
The Wealth of Nations
https://www.yo
utube.com/watc
h?v=E4YlOyuga
to
And
Inventor of the phrase
“The Invisible Hand”
The Free Enterprise System
Seed
Question
What in our country’s
history led us to using the
Free Enterprise System?
Studying Using Quizlet
https://www.youtube.com/watch?v=VyK09manjFU
Story
A Lesson on Socialism
"An economics professor said he had never failed a single student before but had, once,
failed an entire class. The class had insisted that socialism worked - and that no one
would be poor and no one would be rich, a great equalizer for all, for society. The
professor then said ok, we will have an experiment in this class on socialism.
He said that all grades would be averaged and everyone would receive the same grade
so no one would fail and no one would receive an A. After the first test the grades were
averaged and everyone was given a B. The students who studied hard were upset, and
the students who studied little were happy. But, as the second test rolled around, the
students who hadn't studied much for the first test had studied even less, and the ones
who studied hard weren't motivated to study hard again, and they decided they wanted
a free ride too; so they studied little. The second Test average was a D! No one was
happy. When the 3rd test rolled around the average was an F.
The scores never increased as bickering, blame, name calling all resulted in hard
feelings and no one would study for anyone else. All failed .... and the professor
told them that the socialism they wanted would ultimately fail, as they had,
because the reward of success normally goes to those that work harder, but
when government takes the reward away; few will try so no one will succeed."
EPF 2: The student will
demonstrate knowledge of the
role of producers and consumers
in a free enterprise or market
economy
EPF 2: The student will
demonstrate knowledge of the
role of producers and consumers
in a free enterprise or market
economy
Google Classroom
Pre-Test
EPF 2: The student will demonstrate knowledge
of the role of producers and consumers in a
free enterprise or market economy
OBJECTIVE
Be able to describe the most important
facets of a “Free Enterprise System”
Free Enterprise
• Freedom of Choice
• Open Mkt. (S & D)
• The Profit Motive
• Competition
• Limit Gov. Control
Free
Enterprise
OBJECTIVE
Be able to identify the
freedoms generally allowed
in a free enterprise system
OBJECTIVE
Be able to identify the
freedoms generally allowed
in a free enterprise system
What Are
They?
Freedom of Choice
• When to Buy
• When to Sell
• To Make Profit
• To Compete
• To Own
• Freedom to Decide
Freedom of Choice
•Or simply put . . . .
Freedom of Choice
•Or simply put . . . .
To be an
Entrepreneur !!!
Freedom of Choice
Seed Question
How would you react or feel if you
lived in a country that did not provide
for these freedoms?
Freedom of Choice
Seed Question
How would you react or feel if you
lived in a country that did not provide
for these freedoms?
When to Buy
When to Sell
To Make
Profit
To Compete
To Own
Freedom to
Decide
OBJECTIVE
Be able to describe the open market
using the concepts of
“Supply & Demand”
Define Supply & Demand
Demand:
The ability & desire of customers to
own products
Supply
Products/Services available for sale
Describe the Laws of Supply & Demand
Price Laws of Demand:
The price law of demand says that as
the price of a good rises, the demand
will go down, and vice versa.
Price Laws of Supply
The price law of supply states that as
the price rises, the amount of a good
supplied rises, and vice versa.
Describe the Laws of Supply & Demand
Quantity Laws of Demand:
If the quantity of a good demanded
falls, the price will fall, and vice versa.
Quantity Laws of Supply
If the quantity of a good supplied
rises, the price falls, and vice versa.
Describe the Laws of Supply & Demand
Quantity Laws of Demand:
If the quantity of a good demanded
falls, the price will fall, and vice versa.
Quantity Laws of Supply
If the quantity of a good supplied
rises, the price falls, and vice versa.
See
Handout
Describe the Laws of Supply & Demand
Equilibrium
The point at which the amount
demanded is equal to the
amount supplied meaning that
there is no wasted product.
Describe the Laws of Supply & Demand
Equilibrium
The point at which the amount
demanded is equal to the
amount supplied meaning that
there is no wasted product.
More on This in the
Pricing Unit
Describe the Laws of Supply & Demand
Supply & Demand
Exercise
Seed Question
Describe some products that you’ve seen
respond to the Laws of Supply & Demand
(Besides Gasoline)
OBJECTIVE
Be able to define the following terms
associated with the concept of PROFIT:
- Income,
- Expenses,
- Costs,
- Gross Profit,
- Net Profit, &
- Risk
Profit = Incentive
Income - the amount of money a business
receives from the sales of its goods/services
Cost - The amount of money a company spends to get
product into the store
Expenses - The amount of money a company spends
on the operation of the business
Profit = Incentive
Gross Profit - Amount of money made after the cost
of goods is subtracted (Income - Cost)
Net Profit - The amount of money made after the cost
of goods & expenses are subtracted out (Income Cost - Expenses)
Risk - The “gamble” a business or person takes that
they might lose something instead of being rewarded
Point to Remember
Point to Remember
Profit is Good
Profit is Good
Seed
Question
Why is it good?
Profit is Good
Seed
Question
Answer: Motivation, Incentive,
Drive, Goals, etc.
Profit is Good
Seed
Question
What are some examples of
economics incentives?
Profit is Good
Seed
Question
Answer: Income, Profit, Interest Income,
Investment Income, etc..
What Do We Risk Losing?
• Our own money
• The money of other people
(friends, relatives, banks, etc.)
• Our time & energy that we could
spend on a career
• Our hopes/dreams (self esteem,
inheritance, freedom, etc.)
OBJECTIVE
Be able to discuss ways a business
can increase its profits
OBJECTIVE
Be able to discuss ways a business
can increase its profits
Because “Profit is Good”
OBJECTIVE
Be able to discuss ways a business
can increase its profits
Common Sense: How would you
increase profits?
Increasing Profits
•Raise Prices
•Increase Sales
•Increase Efficiency
•Boost Productivity
Increasing Profits
•Raise Prices ?????????
•Increase Sales
•Increase Efficiency
•Boost Productivity
Increasing Profits
Raise Prices ?
Increase Sales
Increase Efficiency
Boost Productivity
It’s Called
ROI
“Return on Investment”
th
4
Trait of Free Enterprise
OBJECTIVE
Be able to discuss in a short
answer question the advantages
to competition in our economy
Competition
• A rivalry between two or
35%
more companies to attract
scarce (limited) customer
dollars
• Market Share - A
company’s part of the
total market for a product
How to Compete
• Lower prices of course.
How to Competition
• Prices of course, but how
else might I compete with
another business?
How to Competition
• Lower Prices
• Better Quality Products
• Better Customer Service
• More Convenience
• More Variety of Products
• Better Marketing
Benefits of Competition
• New Products & Services
• Variety of Products/ Services
• Lower Prices
• Better Customer Service
• Higher Quality Merchandise
• More Information Provided
• Etc.
OBJECTIVE
Be able to identify the
consequences of a lack of
competition in our economy
Consequences of No Competition
(Also Called Colluding or Price Fixing)
• Prices will go up
• Innovation will slow
• Service might suffer
• Quality might suffer
Consequences of No Competition
(Also Called Colluding or Price Fixing)
• Prices will go up
• Innovation will slow
• Service might suffer
• Quality might suffer
• And some experts believe it
takes only 35% of market control
to influence prices in a market
OBJECTIVE
In a matching exercise & short
essay, be able to describe the role
of government in a Free
Enterprise system
The Role of Government
Seed Question
What do you believe the role of
government should be in our Free
Enterprise system?
The Role of Government
•Protect Business Property
Its
the
Law
(fire, police, patents)
•Enforce Contracts
•Settle Disagreements
•Collect & Set Taxes
The Role of Government
Its
the
Law

Acts as a Consumer

Provides for the Public Good

Provides for National Security
The Role of Government
Its
the
Law
• Provide for Public Welfare
• Protect Public Health
• Regulate/Stabilize Economy
• Conserve the Environment
• Protect Consumers
• Protect Competition
• Regulate the Workplace
The Role of Government
Services Provided
•Military
•Police
•Fire Protection
•Education
•Infrastructure
•Postal
•Libraries
•Welfare Services
The Role of Government
Rules & Regulations
Anti-Monopoly Regs.
• Sherman Anti-Trust Act
of 1890
• Clayton anti-trust Act of
1914
• Federal Trade
Commission (FTC)
Other Acts
• Consumer Product
Safety Commission
• Securities/Exchange
Commission (SEC)
• Wheeler-Lea Act
• Zoning, Licensing,
(Adv)
Building Codes
The Role of Government
Rules & Regulations
Worker Protection Rules
• Equal Employment
Opportunity Commission
• Occupational Safety &
Health Admin. (OSHA)
• Minimum Wage Rules
• Child Labor Laws
Business Protection Rules
• Patents
• Copyrights
• Trademarks
The Role of Government
Rules & Regulations
Consumer Protection
• Robinson-Patman
Act
(Price Discrimination)
• Food & Drug
Administration
(FDA)
The Role of Government
Taxes
• Progressive Taxes
• Proportional (Flat) Taxes
• Regressive Taxes
The Role of Government
Taxes
• Income Taxes
• Sales Taxes
• Property Taxes
• Business Taxes
The Role of Government
Taxes
Income Taxes
• Largest income source
• Levied against individuals &
business
• Based on salaries/income
• Allows for “deductions”
• Business collects & sends to the
government
The Role of Government
Taxes
Sales Taxes
• Levied against sales of
goods/services
• Varies from state to state
• Collected by the business
The Role of Government
Taxes
Property Taxes
• Levied against the value
of most personal property
• Levied against individuals
& business
The Role of Government
Taxes
Business Taxes
• Income
Local)
(Federal, State, &
• Personal property
• Payroll
• Social Security
• Unemployment
The Role of Government
Taxes
Business Taxes (cont.):
• Sales taxes
• Corporation taxes
• Business licenses
• Car/truck licenses
• Fees for service
OBJECTIVE
In a matching exercise & short
essay, be able to describe the role
of government in a Free
Enterprise system
See Handout / Activity
Free Enterprise in the USA
REVIEW
• Freedom of Choice
• Open Mkt. (S & D)
• The Profit Motive
• Competition
• Limit Gov. Control
Free
Enterprise
OBJECTIVE
Be able to define the term “Business”
OBJECTIVE
Be able to define
the term
“Business”
and controlling . . .
An activity . . .
and market . . .
by planning,
economic wants & needs
goods & services
organizing,
resources . . .
that satisfies . . .
to produce . . .
Be able to
define the term
“Business”
Unscramble the
Definition on
Quizlet Scatter
OBJECTIVE
and controlling . . .
An activity . . .
and market . . .
by planning,
economic wants & needs
goods & services
organizing,
resources . . .
that satisfies . . .
to produce . . .
“Business”
An activity that satisfies
economic needs by planning,
organizing, & controlling
resources to produce & market
goods & services
Business
An activity . . .
Something done
that satisfies . . .
Makes someone happy
economic wants & needs . . .
Has monetary value
by planning,
Developing a process
organizing,
Getting resources in order
& controlling . . .
Directed by management
resources . . .
Factors of production
to produce . . .
Create, improve upon, change
& market . . .
Moving goods to consumers
goods & services.
Products or things done for others
Business Activity
For the businesses listed below, explain how each
meets the definition of business:
• McDonald’s
• Nichols Hardware
• Google
• (Your Choice)
1. An activity . . .
2. that satisfies . . .
3. economic wants & needs
4. by planning,
5. organizing,
6. & controlling . . .
7. resources . . .
8. to produce . . .
9. & market . . .
10. goods & services.
OBJECTIVE
Be able to describe the three major
types of business ownership &
discuss their advantages &
disadvantages
SOLE PROPRIETORSHIP
• Owned & operated by one
person (Usually highly
skilled)
• employs large %
of the workforce
• examples include
plumbers, dentists,
beauticians, small shop
owners, etc.
PARTNERSHIP
• Two or more
people legally
agree to share the
ownership &
responsibilities of
a business
CORPORATION
• A charted (legal) entity that
operates apart from the
owners
• the corporation will often
sell stock
• the stockholders will
elect a board of directors
to run the company
CORPORATIONS
(Discussion)
Doctors will often
incorporate their
practice; Why?
(Discussion)
SOLE PROPRIETORSHIP
PARTNERSHIPS
CORPORATIONS
ACTIVITY: Identify three advantages & disadvantages of each
Advantages
1.
2.
3.
Disadvantages
1.
2.
3.
SOLE PROPRIETORSHIP
Advantages
• easy to start
• decisions are easy
to make
• low taxes
• fewer gov.
regulations
• you get all the
money!!
Disadvantages
• capital ($) is
limited
• can’t have
“group-think”
• no help available
w/ other skills
• big Risk
PARTNERSHIPS
Advantages
• more ideas &
opinions to
consider
• you have help to
run the business
• the risk is shared
• more capital
available
Disadvantages
• more ideas & opinions
to consider (?)
• harder to make
decisions
• personally at risk
• death of a partner
causes problems
CORPORATIONS
Advantages
• liability is limited to
your investment
• it is easy to raise more
capital (sell more stock)
• it is easy to get into &
out of the corporation
(sell or buy stock)
Disadvantages
• often a complex &
changing ownership
picture making
decisions difficult
• highly regulated
• higher tax rates
OTHER FORMS OF BUSINESS OWNERSHIP
Franchise:
• a legal agreement to operate a business in
the name of a recognized company.
Advantages
Franchisor offers help
Disadvantages
Expensive to buy
Planning already done Limited creativity
OTHER FORMS OF BUSINESS OWNERSHIP
Franchise:
• a legal agreement to operate a business in the name
of a recognized company.
• (Franchisee must follow Franchiser’s Guidelines
regarding business name, slogans, prices, products,
etc.)
Advantages
Franchisor offers help
Disadvantages
Expensive to buy
Planning already done Limited creativity
OTHER FORMS OF BUSINESS OWNERSHIP
Cooperative:
• A company owned by the
customers of that company.
Advantages
Disadvantages
Customer Support
Frequent Ownership Changes
Positive Image
Disputes Among the Owners
Loyal Customers
Complete
the EPF
Quizlets #2
and # 8
HOMEWORK
STUDY
Complete the
EPF 2 Quiz
STUDY
Complete the
EPF 2 Quiz
And Bring
Some
Cash to
Class Next
Time
EPF 3 - The student will
demonstrate knowledge of the
price system
EPF 3 - The student will
demonstrate knowledge of the
price system
Google
Classroom
Pre-Test
Define Supply & Demand
Demand:
The ability & desire of customers to
own products
Supply
Products/Services available for sale
OBJECTIVE
Be able to graph the open
market using the concepts
of Supply & Demand
ACTIVITY
“The Tootsie Pop Game”
1.) Offer tootsie rolls for sale
starting at a high price &
working down, graph results.
Then give the tootsie rolls to a
student to keep, but ask at
what price they may be willing
to make some available for
sale; graph the results.
Tootsie Roll
“Demand Schedule”
$ .30
$ .25
$ .20
$ .15
$ .10
$ .05
0
0
2
4
6
8
10
12
Tootsie Roll
“Demand Schedule”
$ .30
$ .25
$ .20
$ .15
$ .10
$ .05
0
0
2
4
6
8
10
12
Tootsie Roll
“Demand Schedule”
$ .30
$ .25
$ .20
$ .15
$ .10
$ .05
0
0
2
4
6
8
10
12
Tootsie Roll
“Supply Schedule”
$ .30
$ .25
$ .20
$ .15
$ .10
$ .05
0
0
2
4
6
8
10
12
Tootsie Roll
“Supply Schedule”
$ .30
$ .25
$ .20
$ .15
$ .10
$ .05
0
0
2
4
6
8
10
12
Tootsie Roll
“Supply Schedule”
$ .30
$ .25
$ .20
$ .15
$ .10
$ .05
0
0
2
4
6
8
10
12
Supply & Demand
“Plot the Points”
Supply & Demand
“Plot the Points”
Bring Up
Active Vision
on Computer
One
Supply & Demand
Graphing
Supply & Demand
Graphing Demand
Supply & Demand
Graphing Supply
Supply & Demand
(Finding the Equilibrium Point)
Supply & Demand
(Finding the Equilibrium Point)
At this point I will
Max. my profit &
have no waste:
Approx. 8 items @
$ .09 each = $ .72
Supply & Demand
A Change in Demand
D1
D2
Supply & Demand
A Change in Demand
D1
D3
D2
Supply & Demand
A Change in Supply
S3
S1 S2
The Laws
of
“Supply & Demand”
SEE HANDOUT
The Laws
of
“Supply & Demand”
in the Movies
https://www.youtube.com/watch?v=RP0j3Lnlazs
Describe the Laws of Supply & Demand
Lemonade Stand
http://www.coolmath-games.com/0-lemonade-stand
What Determines the Amount of Supply
•Tastes and fashion
•Population
•# of sellers in the
market
•Price Expected
What Determines the Amount of Demand
• Price of good or service
• Price of related goods
• Consumer’s income
• Business taxes &
subsidies
What Determines the Amount of Supply & Demand
•Tastes and fashion
•Population
•# of sellers in the
market
•Price Expected
• Price of related goods
• Consumer’s income
• Price of good or service
• Business taxes &
subsidies
OBJECTIVE
Be able to describe what the terms
“Buyer’s” and “Seller’s” market mean
&
Supply & Demand
Graphing a Buyer’s Market
Buyer’s Market
. . . When the price is above equilibrium price
Supply & Demand
Graphing a Buyer’s Market
Buyer’s Market
. . . When the price is above equilibrium price
Supply & Demand
Graphing a Seller’s Market
Seller’s Market
. . . When the price is below the equilibrium price
OBJECTIVE
Be able to define elastic & inelastic demand and
identify the factors that encourage elasticity
Supply & Demand
Elasticity
S1
Elastic Demand
D1
Elasticity is a measure of a variable's
sensitivity to a change in price
Supply & Demand
Elasticity
S1
Elastic Demand
D1
So, as the
price
changes, the
amount of
demand
changes
substantially
Supply & Demand
Inelasticity
S1
D1
Inelastic
Demand
Inelasticity is a measure of a variable's
LACK OF sensitivity to a change in price
Supply & Demand
Inelasticity
S1
D1
Inelastic
Demand
So, as the
price
changes, the
amount of
demand
changes very
little
What Causes Elasticity?
• The existence of substitutes
• A product being a luxury
• The product represents a large
portion of a consumer’s income
• The amount of competition
OBJECTIVE
Be able to define derived demand
OBJECTIVE
Be able to define derived demand
Noun ECONOMICS
A demand for a commodity, service,
etc., that is a consequence of the
demand for something else.
OBJECTIVE
EXAMPLES:
Designer clothing creates a derived demand for fabrics and textiles
If the demand for leather belts rises, the cattle handlers who sell the
cowhides to the leather suppliers can plan for an increased demand
The demand for fast food has generated demand for healthy food
alternatives
Be able to define derived demand
Noun ECONOMICS
A demand for a commodity, service,
etc., that is a consequence of the
demand for something else.
The Laws of Supply & Demand
Seed Questions
Identify three products that are elastic and
three products that are inelastic
PLUS . . .
The Laws of Supply & Demand
Seed Questions
What two products are you aware of that
generate derived demand?
Which two entrepreneurs (businesses) have
taken advantage of the examples of
derived demand?
OBJECTIVE
Be able to describe how
demand for a product can
generate higher wages for the
workers in that field
No matter what the type of
demand is in play, any increased in
demand can lead to higher wages
for those employed in the industry
and vice versa.
OBJECTIVE
Be able to describe how demand for
a product can generate higher
wages for the workers in that field
For example, real estate salespeople
do much better financially during
periods of economic rallies
OBJECTIVE
Be able to describe how demand for
a product can generate higher
wages for the workers in that field
For example, real estate salespeople
do much better financially during
periods of economic rallies
OTHER EXAMPLES???
“That Price is Out of Whack!”
Sometimes the market for a product or
service goes “out of whack.” This results
in either surpluses or shortages.
If there’s a surplus, then precious
resources were wasted in the creation of
the product.
If there’s a shortage, then people in need
will go without
“That Price is Out of Whack!”
Sometimes the market for a product or
service goes “out of whack.” This results
in either surpluses or shortages.
If there’s a surplus, then precious
resources were wasted in the creation of
the product.
If there’s a shortage, then people in need
will go without
What are some “Out of Whack” prices?
“Out of Whack” Price Fixes
Price
Freezes
Price
Ceilings
Price
Floors
“Out of Whack” Price Fixes
Price Freezes
When Prices are
fixed at a
particular level
and no increases
are allowed
Price
Ceilings
Price
Floors
“Out of Whack” Price Fixes
Price
Freezes
Price
Ceilings
Price Floors
A control or
limit on how
low a price can
be charged for
a product
“Out of Whack” Price Fixes
Price
Freezes
Price Ceilings
A control or limit
on how high
a price is charged
for a product
Price
Floors
“Out of Whack” Price Fixes
Price Freezes
Price Ceilings
When Prices are
fixed at a
Price Floors
A control or limit
particular level
on how high
A control or limit
and no increases a price is charged
on how low
are allowed
a price can be
for a product
charged for a
product
“Out of Whack” Price Fix Examples
Price
Freezes
Price Ceilings
•1970’s Nixon Price •New York City Rent
Controls
Freeze
•Hurricane •Florida Insurance
Price
Freezes
Rates
•Venezuelan Limits
on the Cost of Food
Price
Floors
•Minimum Wage
Laws
•U. S. Grain
Subsidies
“Out of Whack” Price Fix Graphs
Price Floors
Price Floors
A control or
limit on how low
a price can be
charged for a
product
“Out of Whack” Price Fix Graphs
Price Floors
NOTE THAT
THE PRICE
FLOOR IS
HIGHER THAN
EQUILIBRIUM
What does a
price floor do
to the
interaction
between the
Laws of Supply
& Demand?
“Out of Whack” Price Fix Graphs
Price Floors
NOTE THAT
THE PRICE
FLOOR IS
HIGHER THAN
EQUILIBRIUM
Because
demand is less
than supply,
there will be a
surplus of
product on the
market
“Out of Whack” Price Fix Graphs
LIKEWISE
“Out of Whack” Price Fix Graphs
Price Ceilings
Price Ceilings
A control or
limit on how
high a price is
charged for a
product
“Out of Whack” Price Fix Graphs
Price Ceilings
NOTE THAT
THE PRICE
CEILING IS
LOWER THAN
EQUILIBRIUM
What does a
price ceiling do
to the
interaction
between the
Laws of Supply
& Demand?
“Out of Whack” Price Fix Graphs
Price Ceilings
NOTE THAT
THE PRICE
CEILING IS
LOWER THAN
EQUILIBRIUM
Because
demand is
higher than
supply, there
will be a
shortage of
product on the
market
“Out of Whack” Price Fix Impacts
Price Ceilings & Floors
Seed Question
With a partner, do some
research on the economic
impacts of price ceilings &
floors on an economic
system. Use real life
examples
“Supply & Demand” (Not)
EPF 4 - The student will
demonstrate knowledge that
many factors affect income
EPF 4 - The student will demonstrate
knowledge that many factors affect income
What we already know
Income - the amount of money a business receives from the sales of its
goods/services (Also called Revenue)
Cost - The amount of money a company spends to get product into the store
Expenses - The amount of money a company spends on the operation of the
business
Net Profit - The amount of money made after the cost of goods & expenses
are subtracted out. This is the money we get to keep!
1.P = R - (C + E)
EPF 4 - The student will demonstrate
knowledge that many factors affect income
AND that . . .
What we already know
Net Profit = Revenue - (Cost + Expenses)
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
For Example, In the Home Remodeling Industry
https://www.youtube.com/watch?v=Lz-o8jOXL0s
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
Increased Investment
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
Increased Productivity: - An average
measurement of the efficiency of
production. It can be expressed as the
ratio of output to inputs used in the
production process.
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
Enhance Human Capital (Training & HR):
Enhancing all of the knowledge, talents,
skills, abilities, experience, intelligence,
judgment, and wisdom possessed
individually and collectively by
individuals in a population
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
Physical Capital Improvements: All of
the equipment and all of the other
physical things that a business owner or
company invests money into when they
want to produce something
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
Lower Cost of Production: The costs
related to making or acquiring goods
that generate revenue for a firm.
Examples include labor, raw materials,
consumable manufacturing supplies
and general overhead
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
Increased Investment - To put
resources (Land, Labor, Capital) into
something with the expectation of
some benefit in the future
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
Increasing Market Value - the amount
for which something can be sold in a
given market (Just as in Supply & Demand)
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income
Economic Growth - the increase in the
market value of the goods and services
produced by an economy over time. It’s
measured as the percent rate of increase
in production
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a company’s income (Review)
Increased Investment
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a country’s income
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a country’s income
Increased Investment
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
a country’s income
You may
notice
they’re the
same
Increased Investment
EXERCISE
Find, summarize, & present a news
article discussing a country’s efforts
to achieve three of the goals below
Increased Investment
EXERCISE
Find, summarize, & present a news
article discussing a country’s efforts
to achieve three of the goals below
(You can do a paper or PowerPoint)
Increased Investment
EXERCISE
Find, summarize, & present a news
article discussing a country’s efforts to
achieve three of the goals discussed
(Examples)
. . . . China’s government has made
huge investments in factories, urban
infrastructure and heavy machinery
https://www.accenture.com/us-en/insight-outlook-beyond-capital-and-laborchina-productivity-frontier
EXERCISE
Find, summarize, & present a news
article discussing a country’s efforts to
achieve three of the goals discussed
(Examples)
Europe: The “Reinvention of
human capital policies is
required to avoid increasing
welfare state dependency
among the unskilled and to
reduce inefficiencies in
human capital formation.”
http://ftp.iza.org/dp4680.pdf
EXERCISE
Find, summarize, & present a news
article discussing a country’s efforts to
achieve three of the goals discussed
(Examples)
“Fact: it costs significantly less
to make products in low-cost
countries than in local,
developed nations. And you can
easily compare the costs of a
product manufactured in both
locations to prove it.”
http://www.globalsourcesupply.com/blog/global-source-supply/low-cost-countrysourcing-means-lower-production-and-manufacturing-costs---and-more-
EXERCISE
Find, summarize, & present a news
article discussing a country’s efforts to
achieve three of the goals discussed
(Examples)
Economic growth in the United
States is constantly being
driven forward by ongoing
innovation, research and
development as well as capital
investment
http://www.focuseconomics.com/countries/united-states
EXERCISE
Find, summarize, & present a news
article discussing a country’s efforts to
achieve three of the goals discussed
PRESENTATIONS
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
your personal income and
standard of living . . . .
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
your personal income and
standard of living . . . .
Where Standard of Living is defined as “The degree of wealth and material
comfort available to a person or
community.”
EXERCISE
Be able to describe the factors
that can lead to an increase in
your personal income and
standard of living
.
Rank (A. B. C. etc.) the occupations listed
below in terms of their usual income
potential from highest to lowest
A. Restaurant Waiter
C. Professional Athlete
E. Nurse
B. Aerospace Engineer
D. Supreme Court Justice
EXERCISE
Be able to describe the factors
that can lead to an increase in
your personal income and
standard of living
.
Rank (A. B. C. etc.) the occupations listed
below in terms of their usual income
potential from highest to lowest
A. Restaurant Waiter
C. Professional Athlete
E. Nurse
Answer?
C
B. Aerospace Engineer
D. Supreme Court Justice
D
B
E
A
EXERCISE
Be able to describe the factors
that can lead to an increase in
your personal income and
standard of living
.
Rank (A. B. C. etc.) the occupations listed
below in terms of their usual income
potential from highest to lowest
A. Restaurant Waiter
C. Professional Athlete
E. Nurse
B. Aerospace Engineer
D. Supreme Court Justice
What basis did you use for your Ranking?
OBJECTIVE
Be able to describe the factors
that can lead to an increase in
your personal income and
standard of living
Market Value
EPF 5 - knowledge of a nation’s
economic goals
OBJECTIVE
Be able to describe the
official measures of an
economy’s health or, in
other words, “How do we
know if the economy is
doing well?”
MEASURES OF AN ECONOMY’S HEALTH
Seed Questions
How is our economy doing?
How do you know?
WHY IS IT IMPORTANT?
BECAUSE
“Its the economy!”
The state of the
economy is a major
factor in how people
vote for public
officials
Economic Goals
Seed Question
What should our
economic goals be for
this country???
(Identify at least three)
Economic Goals
Usually a country’s
economics goals revolve
around three issues?
1. Inflation
2. Employment
3. Productivity
Economic Goals
1. Low Inflation
• 1 - 5% is ideal
• 10% + is painful
• Deflation is bad also
2. Full Employment
• 96% is full
• All 16+ yrs. old & able to work
Economic Goals
3. Productivity to Increase
• Found by dividing input (of
resources) by output ($ value)
Economic Goals
But how do we know
when we’ve reached our
economic goals?
Economic Goals
But how do we know when
we’ve reached our
economic goals?
We Look at our Economy’s
Measuring Devices
Economic Goals
But how do we know when
we’ve reached our
economic goals?
We Look at our Economy’s
Measuring Devices
What are they?
Economic Measuring Devices
GNP
(GNDP)
Total value of a nation’s products
& services in a year:
Economic Measuring Devices
Standard of Living:
• Measure of the value of goods &
services people have:
• Divide GNP by population
• For example, one year, GNP was
$4,235,000,000,000 & the population
was 240 million. Therefore, the
Standard of living was $17,646
Economic Measuring Devices
Consumer Price Index
• Measures the average price of
400 different normal
household products
• Also called the “Cost of
Living Index”
Economic Measuring Devices
Unemployment Figures
• % of workforce out
unemployed
Economic Measuring Devices
Unemployment Figures
• % of workforce out
unemployed
But it’s not that simple
We have to look at the
types of unemployment
Economic Measuring Devices
• Structural Unemployment:
Unemployment resulting
from industrial
reorganization, typically
due to technological
change, rather than
fluctuations in supply or
demand. Employees need
to be retrained
But it’s not that simple
We have to look at the
types of unemployment
Economic Measuring Devices
• Cyclical Unemployment:
Occurs within the
business cycle. During
prosperity, cyclical
unemployment will be
low, during depressions,
high. Calls for an effort to
recover the economy.
But it’s not that simple
We have to look at the
types of unemployment
Economic Measuring Devices
But it’s not that simple
• Frictional Unemployment: We have to look at the
types of unemployment
Exists in any economy
due to people being in the
process of moving from
one job to another. Can be
positive & might be as
high as 4% of
unemployment
Economic Measuring Devices
But it’s not that simple
• Uncounted Unemployment: We have to look at the
These are people who have types of unemployment
stopped trying to find work
because they’ve lost hope
of finding work. They need
to be inspired and
encouraged to believe that
better times can be had.
OBJECTIVE
Be able to describe the
“Economic Cycle” and
what factors influence its
fluctuations
The Economic Cycle
Prosperity
100
90
Recession Recovery
80
GNP
70
60
50
40
30
20
10
0
Depression
TIME
Inflation
Employment
Productivity
The Economic Cycle
Make a
Large
Chart
Stage/ Prosperity Recession Depression Recovery
Result
1
2
3
4
5
Prosperity
• Lowest
Unemployment
• Maximum Output
• Highest Consumer
Spending
• Possible Inflation
• High Confidence
Recession
• General Slowdown in the Economy
• Unemployment Rising
• Fewer Good/Services Being
Produced
• Spending Slows Down
• Confidence is Waning (Going Down)
Depression
• Prolonged Recession
• Lowest Amount of Spending
• Highest Unemployment
• Production is at its Lowest
• Tax Collection is Down
• Possible Deflation
• Feelings of Hopelessness
• Poverty Occurs
Recovery
• Economy Picks Up
• Unemployment Decreases
• Production Increases
• Spending Increases
• Confidence Recovers
The Economic Cycle
What would you do if
you were a ________
during a ________
business cycle?
MAKE ANOTHER LARGE CHART
What will
you do???
The Economic Cycle
Business
Consumer
Government
Stage/ Prosperity Recession Depression Recovery
Action
Business
1
2
3
4
Consumer/Gov
5 - 20
Prosperity
Business:
Prosperity
Business:
• Invests/Expands
• Hires More People
• Pays More in Taxes
• Maintains Max.
Inventories
• Reaps Profits
• Keeps Prices High
Prosperity
Consumers:
The Government
Prosperity
Consumers:
• Work
• Spend, Spend, Spend
• Save Some
The Government
• Collects Taxes
• Keeps Interest Rates High
Recession
Business:
Recession
Business:
• Starts to slow down
production
• Reduces stock
• Cuts back on
investments &
expansion
• Lays off staff
Recession
Consumers:
The Government
Recession
Consumers:
• Spend less & save more
• Protect their jobs more
The Government
• Encourages investment by
lowering interest rates
• Might spend more to stimulate
the economy
Depression
Business
Depression
Business
• Has massive layoffs or
lowers salaries
• Stops spending
• Eliminates stock (sales)
• spends their savings
• Cuts back on quality
• Lowers prices
Depression
Consumers:
Depression
Consumers:
• Stop Spending
• Spend Their Savings
• Convert Wealth to Dollars
• Loiter
• Open Their Own
Businesses
Depression
The Government:
Depression
The Government:
• Lowers interest rates more
• Offers job programs
• Spends more on welfare
services
• Spends more to stimulate the
economy (?)
• Cheerleads
Recovery
Business:
Recovery
Business:
Does the opposite of a recession:
• Hires
• Spends more
• Invests
• Produces
• Risks more
Recovery
Consumers:
The Government:
Recovery
Consumers:
• Spend more
• Save less
The Government:
• Collects more tax money
• Raises interest rates
• Spends more (?)
The Economic Cycle
GNP
TIME
ASSIGNMENT # 1
Economic Cycle
Complete the “Up or Down” Exercise
ASSIGNMENT # 2
Economic Cycle
With a partner or two, discuss what stage in the economic cycle
our country is currently experiencing?
Each individual in the group needs to find an article supporting
your position on the stage of the economic cycle you believe we’re
experiencing and summarize it.
From your charts, identify three or more steps you believe the
government, businesses, and consumers should each be taking at
this point in time? You can include your own opinions
OBJECTIVE
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
OBJECTIVE
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
• Investment Tax Credits
• Unemployment Insurance
• Job Training Programs
•“Pure” Research
• Fiscal Policy
• Monetary Policy
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Investment Tax Credits An amount that businesses are allowed to
deduct from their taxes reflecting an amount
they reinvest in themselves. Investment tax
credits are structured to reward and
encourage economic growth
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Job Training Programs Training programs and other services that
are available to assist workers who have
been laid off or are about to be laid off.
Services are designed to meet local needs
and may vary from state to state.
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Unemployment Insurance A small source of income for workers who
have lost their jobs through no fault of
their own. Workers who quit or who are
self-employed are generally not eligible
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
“Pure” Government Research A term covering funding for research in the areas
of science, technology and social sciences. The
funding is obtained through a competitive
process in which only the most promising receive
an award. Such processes, which are run by
government, corporations or foundations,
allocate scarce funds
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Fiscal Policy The means by which a government
adjusts its spending levels and tax rates to
monitor and influence a nation's
economy
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Fiscal Policy The means by which a government
adjusts its spending levels and tax rates to
monitor and influence a nation's
economy
For example, increasing federal spending might
stimulate job creation
or reducing taxes might give people more money
to spend thus stimulating the economy
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Fiscal Policy The means by which a government
adjusts its spending levels and tax rates to
monitor and influence a nation's
economy
For example, increasing federal spending might
stimulate job creation
Or Does it?
or reducing taxes might give people more money
to spend thus stimulating the economy
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Monetary Policy The management of money supply and
interest rates. It’s used by the government of
a country to achieve macroeconomic
objectives like inflation, consumption, growth
and liquidity
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Monetary Policy The management of money supply and
interest rates. It’s used by the government of
a country to achieve macroeconomic
objectives like inflation, consumption, growth
and liquidity
For example, what does increasing the money
supply of the country do for the economy?
OR What does decreasing the interest rates
charged banks do for the economy?
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Monetary Policy The management of money supply and
interest rates. It’s used by the government of
a country to achieve macroeconomic
objectives like inflation, consumption, growth
and liquidity
For example, what does increasing the money
supply of the country do for the economy?
OR What does decreasing the interest rates
charged banks do for the economy?
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
Fiscal Policyhttps://www.youtube.com/watch?v=otmgFQHbaDo
Monetary Policy –
https://www.youtube.com/watch?v=1dq7mMort9o
DEBATE -
https://www.youtube.com/watch?v=_tULRch1PRQ
EXERCISE
Be able to describe the actions a government
can do to mitigate the impacts of bad
economic times
• Investment Tax Credits
• Unemployment Insurance
• Job Training Programs
•“Pure” Research
• Fiscal Policy
• Monetary Policy
EXERCISE
Research the history and
content of these
government programs
and present your findings.
EPF 5 - knowledge of a nation’s
economic goals
COMPLETE
THE EPF 5
QUIZLET
EPF 6 - Knowledge of the Nation’s
Financial System (Money & Banks)
EPF 6 - Knowledge of the Nation’s
Financial System (Money & Banks)
But first, some “Jargon” (Technical Language)
Durability
Portability
Divisibility
Uniformity
Acceptability
Medium
Exchange
Store of Value
Measure
Commodity
Fiat
Return
Intermediaries
Facilitate
Transactions
and . . .
Financial Institutions
Financial Market Place
Financial Transactions
EPF 6 - Knowledge of the Nation’s
Financial System (Money & Banks)
But first, some “Jargon” (Technical Language)
Durability
Uniformity
Exchange
Commodity
Intermediaries
Portability
Acceptability
Store of Value
Fiat
Facilitate
Divisibility
Medium
Measure
Return
Transactions
and . . .
Financial Institutions
Financial Transactions
Financial Market Place
See EPF 6 Vocab. Quizlet
EPF 6 - Knowledge of the Nation’s
Financial System (Money & Banks)
Complete the EPF 6
Pretest in Google
Classroom
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . .
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . . A tool used
to measure value
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . . A tool used
to measure value
Characteristics: Durable
Portable
Divisible
Uniform
Limited in Supply
Accepted
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . . A tool used
to measure value
Durable - Bills & coins can be easily replaced should they
become damaged or worn out
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . . A tool used
to measure value
Divisible – Divisibility indicates that money can be broken
down into smaller values
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . . A tool used
to measure value
Limited in Supply – Ensures that money holds its value
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . . A tool used
to measure value
Portable – Portability says that money can easily be
transported from one location to another
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . . A tool used
to measure value
Uniform – Uniformity provides for a standard look to the
various denominations of bills and currency
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . . A tool used
to measure value
Accepted – Acceptability requires that the money be
commonly agreed upon as a value exchange
method
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to define money
and its characteristics
MONEY: Anything widely accepted as
final payment for goods and
services or . . . A tool used
to measure value
Lastly, money is all of a country’s coins,
currency AND checking account deposits
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to describe the
role of money in an
economy
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to describe the
role of money in an
economy
The Role of Money is to . . .
A.) Act as a medium (method) of exchange
* For example, Instead of an artist giving a grocer a
sculpture in exchange for milk, he can give money
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to describe the
role of money in an
economy
The Role of Money is to . . .
B.) Encourage specialization
* For example, instead of trying to do everything someone
needs to do to just live, I can focus on just one job and use
the money I receive from that job to buy what I need
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to describe the
role of money in an
economy
The Role of Money is to . . .
C.) Act as a “store” (holder) of value
* For example, we can put money in something (a bank
or an investment) and it’ll be worth something down the
road. A house I buy now and want to sell in 20 years.
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to describe the
role of money in an
economy
The Role of Money is to . . .
D.) Act as a measure of value
* For example, when discussing a trade (barter) with
someone, we can refer to the number of dollars
something is worth in comparison (ex: Pokémon Cards).
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to describe the
role of money in an
economy
The Role of Money is to . . .
E.) Be a commodity all by itself
* For example, if you were stuck on an island, you and
the other survivors might use coconuts as money for
trade (instead of eating them).
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to describe the
role of money in an
economy
The Role of Money is to . . .
F.) Be a “Fiat” (Government decree)
* For example, By “Fiat,” Big Daddy on the Island
Kingdom of Mocha decreed clams to be the island’s
currency.
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to describe the
role of banks in our
economy
EPF 6 - Knowledge of the nation’s financial system
Objective – Be able to describe the
role of banks in our
economy
Financial market places (banks) bring people
together who have money to lend and are
willing to take risks to earn a return with
people who want to borrow for a specific purpose
OBJECTIVE
Be able to define the terms
associated with international trade
HOMEWORK
International Trade
• Imports - Goods & services
brought into the country
• Exports - Goods & services
sent out of the country
• Balance of Trade - The
difference between a
country’s imports &
exports
International Trade
• Tariff - A tax put on goods &
services brought into a
country
• Quota - A limit on the
number of goods & services
that can be brought into a
country
International Trade

Embargo - The banning of
sales of goods & services
from a specific country.