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Understanding the global economy

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  • 1. Understanding the Global Economy
    How can I make good decisions?
    How am I influenced?
    How can I be successful?
  • 2. Economics
    Study of how to meet
    unlimited competing wants
    with limited resources
  • 3. 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?
  • 4. Marketing Basics - How can I satisfy customers?
    4
  • 5. Think, pair, shareWhat are some things you want, but you can’t go to a store to buy?
  • 6. 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
  • 7. Land, Labor or Capital Resource?
  • 8. Land, Labor or Capital Resource?
  • 9. Land, Labor or Capital Resource?
  • 10. Scarcity
    Difference between wants/needs and available resources
    **key – makes us dependent upon each other globally
  • 11. Think, Pair, Share
    What percent of the world’s consumer’s DO YOU THINK live in the US?
  • 12. 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
  • 13. Think, pair, share:Does the US have more imports or exports?Does the US have a surplus or a deficit?
  • 14. World Importswhat’s going on in this picture?
  • 15. 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
  • 16. example
    EXAMPLE of the business cycle
  • 17. 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
  • 18. Example of how it works…
  • 19. 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
  • 20. 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:
  • 21. Free Enterprise SystemEncourages individuals to start & operate their own businesses w/out gov’t
    Risks
    Potential for business loss or failure
    Freedoms
  • 22. Think, Pair, ShareWhat percent of new businesses fail during their 1st year?What is the #1 reason businesses fail?
  • 23. Choice
    Ownership
    Profit
    Competition
    Free Enterprise SystemFreedoms:
  • 24. Where to work
    what to buy
    from whom
    vote for govtleaders
    Free Enterprise SystemFreedoms: Choice
  • 25. Ownership
    Own your own business and land
    Free Enterprise SystemFreedoms: Ownership
  • 26. 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
  • 27. The profit incentive
  • 28. Competition
    Struggle for customers between companies
    Benefits of:
    Keeps prices low, more choices, better quality, incentive to operate efficiently
    Free Enterprise SystemFreedoms: Competition
  • 29.
  • 30. Price
    Focuses on price
    Non-price
    Focus other than price, ex. Customer service, quality, gift wrap, location
    Free Enterprise SystemFreedoms: Competition
  • 31. 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
  • 32.
  • 33. Surplus/buyers mkt
    More supply than demand – keeps prices low
    Ex. Corn/cornsyrup, homes
    Shortage/sellers mkt
    More demand than supply – keeps prices high
    Ex. Gas, hybrid cars
    Surplus vs. Shortage
  • 34. Surplus vs. Shortage
  • 35. Monopoly
    One firm controls market for a give product (local phone & cable companies)
    Free Enterprise SystemFreedoms: Competition
  • 36. Direct
    Indirect
    Free Enterprise SystemFreedoms: Competition
    vs.
    vs.
  • 37. Direct or Indirect Competition?
    vs.
  • 38. Direct or Indirect Competition?
    vs.
  • 39. Direct or Indirect Competition?
    vs.
  • 40. Direct or Indirect Competition?
    vs.
  • 41. Direct or Indirect Competition?
    vs.
  • 42. Direct or Indirect Competition?
    vs.
  • 43. 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

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