Understanding the Global Economy How can I make good decisions? How am I influenced? How can I be successful?
Economics Study of how to meet unlimited competing wants with limited resources
Think, ShareWe all compete for resourcesWhat are some competing wants in your family? Ex. Your sisters wants to buy a ______, but you want to buy a ______.List 2 competing wants in our country?
Marketing Basics - How can I satisfy customers? 4
Think, pair, shareWhat are some things you want, but you can’t go to a store to buy?
ResourcesAll the things used in producing goods, services, buildings, ideas Capital Money, buildings, equipment, infrastructure – everything needed to start & operate a business Labor All who work full or part time, public or private Natural/Land Land, coal, oil, trees, water
Scarcity Difference between wants/needs and available resources **key – makes us dependent upon each other globally
Think, Pair, Share What percent of the world’s consumer’s DO YOU THINK live in the US?
Balance (of trade)The difference in value between exports and imports of a nation Imports Goods and services purchased from other countries Exports Goods and services sold to other countries deficit More imports than exports surplus More exports than imports
Think, pair, share:Does the US have more imports or exports?Does the US have a surplus or a deficit?
Business CycleStages an economy goes through due to recurring slow down and growth Prosperity Good time to start a new business, prices rise, economy is flourishing (90’s) Recession Slow down for at least 6 months, companies reduce workforce, prices are lowered Depression Long recession, hard to find a job, many businesses close, very low prices Recovery Business spikes up, people find jobs, demand for products increases, prices increase
Government Controlsattempts to control the economy by policy changes Taxes Raise to gain money for govt, lower to give money to citizens Interest rate Raise to gain money for businesses, lower to gain money for citizens Social service programs Provide programs for economic stability for all citizens Ex. Welfare, food stamps, unemployment and job services
Economic systemsHow gov’tanswers the following questions determines their economic policy 3 questions: what will be produced how will it be produced who will receive it
Market economy/capitalism People answer – private ownership, marketplace competition Planned economy/communism Gov’t answers – gov’t ownership, no competition Mix economy/socialism Mix – almost all economies are a mix Types of Economic Systems:
Free Enterprise SystemEncourages individuals to start & operate their own businesses w/out gov’t Risks Potential for business loss or failure Freedoms
Think, Pair, ShareWhat percent of new businesses fail during their 1st year?What is the #1 reason businesses fail?
Where to work what to buy from whom vote for govtleaders Free Enterprise SystemFreedoms: Choice
Ownership Own your own business and land Free Enterprise SystemFreedoms: Ownership
Profit Money earned after all costs and expenses have been paid Owners get to keep this (rather than give to govt) incentiveto take the risk of running the business (still pay taxes though) revenue Gross income from sales BEFORE costs and expenses expenditures Costs, expenses and taxes incurred on a business in order to operate Free Enterprise SystemFreedoms: Profit
Price Focuses on price Non-price Focus other than price, ex. Customer service, quality, gift wrap, location Free Enterprise SystemFreedoms: Competition
Pure Infinite amount of competitors (like internet) supply Businesses ability and willingness to sell products demand Consumers ability and willingness to buy products Equilibrium point When demand equals supply Free Enterprise SystemFreedoms: Competition
Explain economics Explain how the phases in a business cycle effect SER industries Explain the concept of supply & demand Explain competition as it relates to SER industries Understanding the Economy