Lesson 20: Economics - Understanding Macroeconomic Influences and Economic Structures

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Watch this with a 10-15 minute audiotrack at http://vimeo.com/novusprogram/lesson20

The lesson introduces some of the basic metrics macroeconomics uses to assess the overall efficiency of an economy, including national output, inflation, and unemployment. The second part of the lessons addresses the three main types of economic structures - free (market), command (planned), and mixed - and their basic laws that govern their behavior.

The Novus project is a combination of video tutorials designed to be used in conjunction with a free business simulation software program. The Novus Business and IT Program contains 36 business and IT training videos, covering basic finance, accounting, marketing, economics, business strategy, Word, Excel, and PowerPoint. Users will have an opportunity to apply the lessons in the Novus Business Simulator. Over six rounds, the user or teams will have to make decisions on capital purchases, financing, production, financing, and human resources for a microbrewery. This channel has arranged the 36 video lessons into the order in which they are meant to be used with the simulator. To watch this slideshow as a video, please go to our Vimeo page at: https://vimeo.com/novusprogram. To download our free business simulation software, please go to our SourceForge page at: http://sourceforge.net/projects/novus/.

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Lesson 20: Economics - Understanding Macroeconomic Influences and Economic Structures

  1. 1. Economics: Understanding Macroeconomic Influences and Economic Structures Objective: To understand the basic metrics macroeconomics uses to assess the overall efficiency of an economy and the three main types of economic structures - free (market), command (planned), and mixedNovus Business and IT Training Program
  2. 2. Macroeconomics Main economic structures: • Free (market) • Command (planned) • Mixed Main macroeconomic topics: • Output • Inflation • UnemploymentNovus Business and IT Training Program 1
  3. 3. Economic Output National Output = Total Value of all Goods and Services an Economy Produces Over a Length of Time also known as Gross Domestic Product (GDP)Novus Business and IT Training Program 2
  4. 4. Unemployment• Unemployment calculated the number of people willing and capable of working, but without jobs• Different types of unemployment: – Classical – Frictional – StructuralNovus Business and IT Training Program 3
  5. 5. Inflation• Inflation = Rise in prices of all goods and services throughout an economy• Inflation and Unemployment are inversely related (they work in opposite directions)• Inflation impacts all business ownersNovus Business and IT Training Program 4
  6. 6. Circulation of Money $ $ The “Velocity” of money refers to how quickly currency is exchanged between buyers and sellers in an economy.Novus Business and IT Training Program 5
  7. 7. Economic Structures Free, or Market, Economies: - Little to no government or other outside interference - Buyers and sellers agree on price - Sellers decide how much of what to produce Command, or Planned, Economies: - Government controls production levels of goods and services - Very little freedom for individuals buyers and sellers Free / Market Command / PlannedNovus Business and IT Training Program 6
  8. 8. Mixed Economic Structures• Contains elements of Free and Planned economic structures• Government intervention primarily related to: – Environmental Controls – Social Services or Welfare – State Ownership of Production FacilitiesNovus Business and IT Training Program 7

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