Transcript File - West Meck High School Civics and Economics

Unit 8:
Macroeconomics
Warm-up

How is the number of electors in the
Electoral College for each state
determined?

Why has the U.S. government
responded slowly to climate change
issues, such as global warming?

a. by the order in which they
declared statehood


b. based on the number of members
in Congress
a. The Supreme Court has ruled such
actions to be outside the jurisdiction
of the government.

b. There are no federal agencies
with the authority to enforce
climate-related regulations.

c. The problem of climate change is
too complicated to be impacted by
legislation.

d. There is substantial political
opposition to climate change
initiatives.

c. according to voter turnout

d. by the number of representatives
in each state’s legislature
Market Structures &
Functions of Money
Functions of Money
Interdependence - When two things depend on each
other
Wage/price control - When the government
determines prices or wages, not the market.
Barrier - Things that make it hard to enter the market.
Homogenous - Everything is the same.
Firm - a business organization that owns or operates
one or more establishments providing goods and
services.
Functions of Money
–Medium of Exchange
•Money is accepted by everyone in exchange for goods or
services. It is useful to everyone.
–Standard of Value
•Money allows us to easily compare the value of two things.
(Comparing $$ to $$, instead of $$ to something else.)
–Store of Value
•Money keeps its value. It’s just as useful in a month as it is
today.
Types of Money
•Commodity Money – Money that has intrinsic
value – it’s naturally worth something (gold,
silver coins).
•Fiat Money – Money that’s only worth something
because the gov’t says it is.
Perfect Competition
- All firms are almost identical in product and
price. Very small differences can produce
drastically different results.
•Number:
▫Many small firms
•Nature of Product:
▫Homogenous (same thing)
Cont.
•Level of
Competition:
▫HIGH
Competition/NO
Price control
•Impact on
Consumers:
▫Low Price, High
quality
Oligopoly
- Highly competitive firms fight over customers while
collaborating to keep competitors out of the market.
- Usually a market with high barriers to entry.(IE
expensive infrastructure required.)
•Number:
▫A FEW large firms
•Nature of Product:
▫Differentiated (similar but not exact)
Cont.
•Level of Competition:
▫HIGH Competition / SOME price control
•Impact on consumers
▫LOW prices/ fewer choices
Monopoly
A single firm dominates an entire market. Usually
involves heavy government regulation.
Insurmountable barriers to entry.
Situations where having more than one firm makes no
sense.
•Number:
▫1 Large Firm
•Nature of Product:
▫Unique
Cont.
•Level of Competition:
▫NO Competition / Price setter
•Impact on Consumers
▫High Price/ NO choices
Monopolistic Competition
Many Firms all of whom produce similar
products. Highly competitive and
therefore easy to start new businesses.
•Number:
▫Many Firms
•Level of Competition:
▫HIGH Competition / SOME price control
Cont.
•Barriers:
▫Easy Entry and Easy Exit
•Nature of Product:
▫Differentiated (similar but not exact)
Exit Ticket

Which of the following is one of
the main functions of money?
A.
to allow stockholders to make
earnings
B.
to compare the values of goods
and services
C.
D.
to ensure the government collects
it revenues
to secure the funds necessary for
military expenditures

When a market is dominated by a
few large profitable firms it is a
considered which of the
following?
A.
Corporation
B.
Monopoly
C.
Oligopoly
D.
Partnership
Reflection
Why is competition important? How do you, as the consumer,
benefit from it?
Why are Monopolies bad for consumers?
Answer in a paragraph or two.
Warm-up

Which category of laws is best
exemplified by amendments or
Supreme Court rulings?

What was the major
accomplishment of the Justinian
Code?

a. Civil


b. Criminal
a. it gave extreme punishments to
people who broke laws

c. Constitutional


d. Administrative
b. it simplified and standardized
Roman laws so that anyone can
understand them

c. it made laws based on morality
instead of punishment

d. it was the first written system of
law
Types of Businesses
Quick Write
•Pick a business:
In a paragraph or two describe how you think it
operates. Who owns it? What type os stuff does it
sell? Does it seem like it does good business? Etc.
What type of business is it?
Vocabulary
•Merger: When two or more companies join
together under one name
Vocabulary
•Unlimited liability: Risk extends beyond your
share in a company.
(you could lose EVERYTHING!)
•
•Limited Liability: Risk only involves your
share of the company.
Liability = Risk
Sole Proprietorship
•Description
▫1 person owns and operates the company
•Advantages
▫The owner makes ALL decisions and reaps ALL the
benefits
•Disadvantages
▫Unlimited Liability
•Examples- Girl’s lemonade stand, Shima’s
beauty salon
Partnership
•Description
▫2 or more people own and operate the company
•Advantages
▫Divide tasks among partners
▫Access different skills of partners
•Disadvantages
▫Share Profits
▫Unlimited liability
•Example- Doctors and Law offices
Corporation
•Description
▫A company divided into shares who are owned by
stockholders
•Advantages
▫Limited Liability
•Disadvantages
▫Double taxes
▫Gov’t regulations
•Examples- Disney, IBM, Microsoft, Nike, Apple
Franchise
•Description
▫A company that is individually owned but belongs to a
a parent corporation (sole-proprietorship &
Corporation)
•Advantages
▫Built-in reputation
▫Limited Liability
•Disadvantages
▫Loss of freedom & decision making
•Examples-the Panthers, McDonald’s, Five Guys
Burgers
Mergers
Horizontal Merger- when 2 or more companies making
the same thing join together.
•
EX: XM Radio & Sirius Radio
●
Vertical Merger- when 2 or more companies involved in
different stages of making the same thing join together.
•
EX: Oils companies buy oil fields, tankers, and gas
stations
Exit Ticket

What is one disadvantage of
having a partnership style of
business?

What makes a corporation
different from other types of
businesses?
A.
share the decision
A.
B.
potential for conflict in decision
making
An owner is responsible for the full
legal liability of losses.
B.
A group of owners has the legal
status to act as a legal entity.
C.
Organized labor unions make all
legal and business decisions.
D.
Shareholders that own major
blocks of stock are responsible for
all legal liability.
C.
limited fundraising
D.
unlimited liability
Reflection
•Pick a business:
In a paragraph or two describe how you think it
operates. Who owns it? What type os stuff does it
sell? Does it seem like it does good business? Etc.
What type of business is it?
Warm-up

US Air was heavily fined by the
FAA (an executive agency) for not
meeting safety regulations. What
type of law did US Air violate?

In criminal cases, the person who
works for the state and brings
charges against an offender is
called the

a. administrative law

a. Judge

b. civil law

b. Prosecution

c. constitutional law

c. Defense

d. criminal law

d. Plaintiff
The Business Cycle
and Circular Flow
The Stock Market
Stock Market: The exchange of all companies’ stocks.
The Stock Market
Bull Market – The average value of stocks is going up.
Bear Market - The average value of stocks is going down
The Business Cycle
The Business Cycle
Peak (Boom)
•Economy: Good
•Inflation: High
•Unemployment: Low (people have jobs)
Contraction (Recession)
•Economy: Declining
–(e.g. 6 months of decreasing GDP)
•Inflation: Falling
•Unemployment: Rising (people losing jobs)
Trough (Depression)
•Economy: Bad, GDP is low
•Inflation: Low (deflation)
•Unemployment: High (a lot of people don’t have
jobs)
Expansion (Growth)
•Economy: Improving
•Inflation: Rising
•Unemployment: Falling (people getting jobs)
•Goal: CONTROLLED expansion…not too fast, not too
slow
Circular Flow
Exit Ticket

What could the government do if
prices have been increasing
steadily and the government
would like to do something to slow
down the inflationary cycle?
A.
increase spending
B.
decrease taxes
C.
increase spending and decrease
taxes
D.
cut spending and increase taxes

What should be done if
unemployment is increasing?
A.
The government could increase
spending
B.
The government could cut taxes
C.
The government could increase
spending and cut taxes
D.
The government could increase
taxes and decrease spending
Reflection
Why is measuring the Economy important?
What tools are available to measure the Economy? How
effective are they?
Warm-up

In civil cases, what is the term
used to describe the injured
person who is bringing the
charges?
b. The trial must be held quickly.

a. Defendant
c. The burden of proof is on the
prosecutor

b. Plaintiff

c. Prosecutor
d. The state must have DNA
evidence to prove guilt.

d. District Attorney

What does “innocent until proven
guilty” mean in a court of law?

a. The accused must prove his
innocence.



Economic
Philosophers
Intro
Read pages 716 and 717 in your book…
—
1.What is another name for capitalism?
2. In a capitalist economy, who makes the decisions?
3. What is another name for a controlled economy?
4. What is socialism?
Vocab
Capitalism: form of economy where production is
—
controlled by private citizens
—
Invisible hand: Adam Smith’s term for the force
—
that controls the economy
Patent: a temporary government protection on an
—
invention (design).
—
Copyright: a permanent government protection on
—
an idea.
Why is protecting ideas important?
Not in the Packet but write
these down
Animal Spirits - The bull and the bear, aka
people don’t always act as rational
investors.
Stimulus Spending - Government spending
designed to create aggregate demand.
Liquidity - How “fluidly” money can move
around the economy. How easy is it to
borrow money?
Benefits of Competition
Competition creates…
-cheaper prices
—
-better quality
—
-greater variety
—
Adam Smith
Capitalist/Free Market Economy
—
Economic Goal:
ECONOMIC FREEDOM
—
Economic Theory:
“Laissez-Faire”-”hands off” –
—
Gov’t should stay out.
The “Invisible hand” will set
—
the prices and quantity
Competition & profit = good!
—
—
Father of ECONOMICS
Book: The Wealth of Nations
Karl Marx
Command Economy is best.
Economic Goal:
ECONOMIC EQUALITY
—
Economic Theory:
Decisions made by central
—
planner (gov’t)
Equal distribution of wealth
—
—
Book: Communist Manifesto
—
Father of Communism
John Keynes
Mixed Economy is best (like
USA)
Economic Goal:
ECONOMIC GROWTH &
—
STABILITY
Gov’t should stay out of the
economy (market) unless
there is a problem.
Problems? Gov’t should step
in to fix it (command).
Father of Keynesian Theory
—
F.A. Hayek
-Government
Intervention limits
economic growth.
-The free market should
guide the economy.
Businesses run on a
cycle that should not
be interrupted.
-Created the Austrian
School of Economic
Thought.
Capitalism and the Free
Market
Traditional Economy
•What to produce?
–What your ancestors produced.
•How to produce?
–The way it’s always been done.
•For whom?
–Your family and village.
•Not much tech. Focus on basic needs
•Needs are met by hunting, gathering and farming.
Command/ Planned Economy:
•Decisions are made by central planners who make them
according to what they believe to be in the best interest of the
whole.
•There is no competition, business is not run for profit.
Market Economy
•Decisions are made by individual buyers and
sellers who act in their own self interest.
•Means of production is privately owned,
supply and demand are the main factors in
making decisions.
•There is competition for business and profit is
the main motive.
Mixed Economies
Combines some aspects of multiple types of economies.
-ex. US has free enterprise and government regulation at the same
time
Who Holds the Wealth
Exit Ticket

What is a common trait that mixed
and market economies share with
one another?
B. A market economy

A. Competition

C. A mixed economy

B. Nationalization of business

D. A traditional economy

C. Self-sufficiency

D. Dictatorship

The economy of the United States
is often described as:

A. A command economy

Exit Ticket

Under which economic system
would the factors of production
most likely be owned by the
government?

What did John Keynes believe the
government should provide to the
economy?
A.
Free Money

A. Market Economy
B.
Rapid Growth

B. Command Economy
C.
Solid Plans for Investment

C. Traditional Economy
D.
Stability

D. Mixed Economy
Three Column Notes
Divide your paper into thirds
—
Each third represents a type of economy: Market,
—
Command, or Mixed
On each third you must:
—
¡Write
5 descriptive/key words related to that type of economy
¡Put
the name of the economist associated with that type of economy,
and the goal of that economy
¡Draw
one picture illustrating how that economy works, or something
related to it.
¡Use
markers, colored pencils or crayons. This should be colorful and
visually appealing.
Warm-up

What is required of a third party in
during arbitration?

How are most disagreements
resolved in a civil trial?

a. previous legal experience


b. impartial to the conditions of
the case
a. A jury will determine the
outcome in a trial.

b. With legal assistance, the
parties settle out of court .

c. The judge helps them reach
consensus.

d. The party who can afford the
best attorney wins.

c. sequestered during deliberation

d. new to the situation or conflict
Fiscal Policy
Tax Systems
Progressive – Rich pay higher % of money
than poor (our income tax)
Regressive – Poor pay higher % of their
income than rich (sales tax)
Proportional – Everyone pays equal %
Excise Tax – Tax on a particular type of item
(cigarettes, alcohol, gas)
Fiscal Policy = actions Congress can take
(spending, taxes, gov’t programs)
nMonetary Policy = controlled by the Federal
Reserve (amount of $$, interest rates)
n
nFederal
Reserve (“The Fed”) = central bank
for U.S.
Exit Ticket

What is fiscal policy?
A.
strategies used by the Federal
Reserve System to regulate the
nation’s supply of money and
credit
B.
use of the federal government’s
power to tax and spend in order
to regulate the level of economic
activity
C.
the idea that the government
should not interfere in the
economy
D.
a situation occurring when nearly
everyone looking for work is able
to find a job
Warm-up

Sheriffs’ primary responsibility is to
enforce laws at the local level.
Who is responsible for enforcing
laws at the state level?

Which statement is the best reason
for the increased use of plea
bargains in the criminal court
system?

a. members of the legislature


b. district court judges
a. Plea bargains result in longer
and tougher sentences.

c. the governor


d. a magistrate
b. The court dockets are
backlogged with cases.

c. There is an abundance of court
appointed attorneys to handle
cases.

d. There is a lack of willing
participants in the jury pool.
Monetary Policy
Close Read
Read the article, complete the questions.
Monetary Policy
Vocab
Interest Rate - The cost of borrowing money.
Reserve Ratio - The amount of money in total deposits
a bank must have on hand and may not lend out.
Bonds - Basically an IOU. Money is invested in the
government with a fixed rate of interest paid out to
you after the loan is matured.
Economic Problem
Inflation
Prices are too high because people have to much
money. (More money becomes worth less)
The goal of the Federal Reserve is to decrease the
money in the hands of consumers.
They want contractionary or tight fiscal policy.
____________ Interest Rates (More expensive to borrow money)
____________ Reserve Ratio (Banks have less to lend)
____________ Bonds (If people invest their income in bond they
have less to spend)
Unemployment
People are losing their jobs because there are not
enough people spending money.
The goal of the Federal Reserve is to increase the
money in the hands of consumers.
They want expansionary or loose fiscal policy.
____________ Interest Rates (Less expensive to borrow money)
____________ Reserve Ratio (Banks have more to lend)
____________ Bonds (If the government pays out bonds people
have more cash to spend)
Exit Ticket

What is monetary policy?
A.
strategies used by the Federal
Reserve System to regulate the
nation’s supply of money and
credit
B.
use of the federal government’s
power to tax and spend in order
to regulate the level of economic
activity
C.
the idea that the government
should not interfere in the
economy
D.
a situation occurring when nearly
everyone looking for work is able
to find a job
Warm-up

a. Most Americans are apathetic
towards voting and think their vote
doesn’t matter.
Which term describes an election
in which citizens vote directly on
public policy questions?

a. Local act

b. Recall

b. Most Americans do not believe
in democracy

c. Ordinance

c. Most voters think that all
elections are of equal importance.

d. Referendum

d. Most Americans never vote
because the requirements are too
high.

What a major cause of non-voting
in the United States?

Productivity and
comparative
advantage
Anticipatory Set
You are a tomato farmer. You plant seeds by hand, and then
walk around with a watering can to water the seeds until they
grow. When they grow, you get a couple of your friends and
you all go pick them by hand. You make them into tomato
sauce to sell. Your friends each take some tomatoes home
and make sauce in their kitchens. Then they bring it all to you
to pack into jars. You’re not making a lot of money this way,
and other tomato growers seem to be producing a lot more
tomato sauce in a lot less time.
1.How could you make your job easier?
2.How could you grow more tomatoes?
3.How could you make more sauce in less time?
4.Is there anything else you could do to improve how
much you are producing?
Traditional Economy
•What to produce?
–What your ancestors produced.
•How to produce?
–The way it’s always been done.
•For whom?
–Your family and village.
•Not much tech. Focus on basic needs
•Needs are met by hunting, gathering and farming.
Command/ Planned Economy:
Decisions are made by central planners
who make them according to what
they believe to be in the best interest
of the whole.
•There is no competition, business is not
run for profit.
•
Market Economy
•Decisions are made by individual buyers and
sellers who act in their own self interest.
•Means of production is privately owned,
supply and demand are the main factors in
making decisions.
•There is competition for business and profit is
the main motive.
Mixed Economies
Combines some aspects of multiple types of
economies.
-ex. US has free enterprise and government
regulation at the same time
Output: something made/produced
Input: something that is used to
make/produce an output
Input v. Output Practice
Productivity
-How
well resources are being used to
produce a good or service.
Division of Labor
-Breaking
up the steps of production
among many workers
Specialization
-Each worker learns a specific job and becomes an
expert in that task.
-More efficiency = More profit.
Assembly Line
-Increases
productivity by having
workers stand still and have output
come to them to work on.
-Where
is it Used?
Subway, Car Factories
Automation
-Increases
productivity by using
machines instead of humans
(machines don’t get tired or take
breaks)
-Where
is this used?
Car factories, ATMs
Technology
-Increases
productivity by improving the
tools used to produce goods (robots,
computers)
-Where
is it Used?
McDonald’s touch screens, Car factories,
power points in class!
Human Capital
-Increases
productivity by making the
worker smarter.
-Where
is it Used?
Professional Development for teachers
Law of Diminishing Returns
-Productivity
will increase to a point,
then begin to decrease.
Comparative Advantage
-When
a country produces a good that
is easy to make instead of a good that
is hard to make.
Specialization Practice
Suppose Tom can produce either 5 units of good X or 15 units of good Y
in one day while Harry can produce either 2 units of X or 10 units of Y
in one day.
a. If no specialization is possible, what is the opportunity cost to Tom of
one unit of good X? Of one unit of good Y?
b. If specialization is possible, in which good should Tom specialize? In
which should Harry specialize? Explain.
Exit Ticket

Division of labor is:

A. Breaking a job into smaller tasks

B. Comparative advantage of
production

C. Greater productivity

D. Human-made resources in a
good or Service

Which of the following terms
describes a situations in which one
nation can produce a good more
efficiently than another?
A.
Devaluation
B.
Atrophy
C.
Comparative Advantage
D.
Trade Inequity
Reflection
Warm-up

What is the primary purpose of a
lobbyist?

a. To influence public officials to
support a point of view

b. To discourage change within the
legislature

c. To encourage citizens to vote in
all elections

d. To conduct surveys to determine
opinion polls in areas.

Why has the U.S. government
responded slowly to climate change
issues, such as global warming?

a. The Supreme Court has ruled such
actions to be outside the jurisdiction
of the government.

b. There are no federal agencies
with the authority to enforce
climate-related regulations.

c. The problem of climate change is
too complicated to be impacted by
legislation.

d. There is substantial political
opposition to climate change
initiatives.
International
Economies and
Regulation
Vocabulary
• Migration-big groups of people moving
from one place to another.
• Out-sourcing- when companies move jobs
from one place to another to cut costs.
Vocabulary
• Bear market- When the stock market is
going down.
• Bull market- When the stock market is
going up.
Vocabulary
• Dividends- money stockholders
periodically get from improving stocks.
• Capital gains/loss- the money stockholder
make or lose when they sell their stocks.
Silicon Valleycenter of
technology
research
Rust/Frost Belt- people
are leaving this area
Research
Triangleresearch
center with
many
colleges
Sun Belt- people moving
to this area for jobs
Declining textile and furniture
• Companies have out-sourced jobs to China
and downsized (shrunk).
Vocabulary
• Globalization- people and countries
working together despite barriers.
• Unfavorable balance of trade- When a
nation imports more than it exports.
Vocabulary
• Tariff- A tax on an imported good
• Quota- A limit on the amount of imported goods
**These protect domestic businesses!**
• Embargo- when a group of nations refuse to
trade with a selected country
Vocabulary
• Multinational conglomerate- a big
company that does business in many
countries.
• Deregulation- when the government lifts
restrictions on businesses
International Trade
• Protectionism - a policy designed to
•
•
protect domestic economy (buy American!)
Tariff - tax on foreign imports (so people
support U.S. businesses)
Embargo - prohibition against trade with a
country (we refuse to trade with Cuba)
– Why? Punishment, isolation, etc.
International Trade
• Absolute Advantage – the ability to
produce more of a good or service than
someone else given the same
resources.
• Comparative Advantage – the ability
to produce certain good more efficiently
than another (at a lower opportunity
cost)
International Trade
• Comparative Advantage…continued:
– Doesn’t mean you can make MORE overall,
just that you give up LESS.
• U.S. produces corn. Saudi Arabia
produces oil.
– We sell them corn, they sell us oil,
everyone uses their resources as efficiently
as possible.
International Trade
• NAFTA = North American Free Trade
Agreement
– Removed trade restrictions between U.S.,
Mexico and Canada.
Technology & Supply
• New technology leads to cheaper
production costs and increases supply
• It impact consumers by making goods
cheaper
Protectionism
• A policy of trade restrictions to help
domestic businesses
• Examples
– Tariff
– Quota
– Immigration restrictions
Impact protectionist policies
• Embargos, tariffs & quotas create barriers
to international trade and globalization.
Warm Up (And get out HW)
1. Look on page 724 – what are ‘developing’
countries?
2. What problems do ‘developing’ countries
face?
3. If the U.S. is a developed country, how
are we different from developing
countries?
Developed vs. Less Developed
(Developing) Nations
• Developed Nations
–
–
–
–
U.S., Canada, most of Europe
Wealthier, high per capita GDP
More industrial jobs, less agriculture
Higher literacy rate (better education)
• Less Developed (Developing) Nations
–
–
–
–
Haiti, Cuba, much of Africa,
Less wealthy, lower per capita GDP
More agriculture, less industry
Lower literacy rate (less education)
Global Organizations
WTO (World Trade Organization)
• Oversees international trade and trade
rules.
Global Organizations
EU - European Union
• Ended trade barriers between most
European nations.
– Created the Euro - one currency for the whole
EU
IMF - International Monetary Fund
• Helps build the economy of poor/
developing nations.
Global Organizations
World Bank
• Provides financial assistance to developing
nations
UN - United Nations
• Maintains international peace and
cooperation.
– Handles international laws (apply to multiple
countries).
Balance of Trade
• Trade Deficit - aka unfavorable balance of
trade
– Country imports more than it exports
• Trade Surplus – aka favorable balance of
trade
– Country exports more than it imports
Exit Ticket

Which world organization would
promote peace, security, and
economic development in the
world?
A.
European Union (EU)
B.
United Nations (UN)
C.
World Trade Organization (WTO)
D.
World Health Organization (WHO)

What do the International
Monetary Fund and the World
Bank do?
A.
Regulate international trade
B.
Politically assist developing nations
C.
Loan money to countries
D.
Oversee mixed economies