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Understanding the global economy


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Understanding the global economy

  1. 1. Understanding the Global Economy<br />How can I make good decisions?<br />How am I influenced?<br />How can I be successful?<br />
  2. 2. Economics<br />Study of how to meet <br />unlimited competing wants <br />with limited resources<br />
  3. 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?<br />
  4. 4. Marketing Basics - How can I satisfy customers?<br />4<br />
  5. 5. Think, pair, shareWhat are some things you want, but you can’t go to a store to buy?<br />
  6. 6. ResourcesAll the things used in producing goods, services, buildings, ideas<br />Capital<br />Money, buildings, equipment, infrastructure – everything needed to start & operate a business<br />Labor<br />All who work full or part time, public or private<br />Natural/Land<br />Land, coal, oil, trees, water<br />
  7. 7. Land, Labor or Capital Resource?<br />
  8. 8. Land, Labor or Capital Resource?<br />
  9. 9. Land, Labor or Capital Resource?<br />
  10. 10. Scarcity<br />Difference between wants/needs and available resources<br />**key – makes us dependent upon each other globally<br />
  11. 11. Think, Pair, Share<br />What percent of the world’s consumer’s DO YOU THINK live in the US?<br />
  12. 12. Balance (of trade)The difference in value between exports and imports of a nation<br />Imports<br />Goods and services purchased from other countries<br />Exports<br />Goods and services sold to other countries<br />deficit<br />More imports than exports<br />surplus<br />More exports than imports<br />
  13. 13. Think, pair, share:Does the US have more imports or exports?Does the US have a surplus or a deficit?<br />
  14. 14. World Importswhat’s going on in this picture?<br />
  15. 15. Business CycleStages an economy goes through due to recurring slow down and growth<br />Prosperity<br />Good time to start a new business, prices rise, economy is flourishing (90’s)<br />Recession<br />Slow down for at least 6 months, companies reduce workforce, prices are lowered<br />Depression<br />Long recession, hard to find a job, many businesses close, very low prices<br />Recovery<br />Business spikes up, people find jobs, demand for products increases, prices increase<br />
  16. 16. example<br />EXAMPLE of the business cycle<br />
  17. 17. Government Controlsattempts to control the economy by policy changes<br />Taxes<br />Raise to gain money for govt, lower to give money to citizens<br />Interest rate<br />Raise to gain money for businesses, lower to gain money for citizens<br />Social service programs<br />Provide programs for economic stability for all citizens<br />Ex. Welfare, food stamps, unemployment and job services<br />
  18. 18. Example of how it works…<br />
  19. 19. Economic systemsHow gov’tanswers the following questions determines their economic policy<br />3 questions:<br />what will be produced <br />how will it be produced<br />who will receive it<br />
  20. 20. Market economy/capitalism<br />People answer – private ownership, marketplace competition<br />Planned economy/communism<br />Gov’t answers – gov’t ownership, no competition<br />Mix economy/socialism<br />Mix – almost all economies are a mix<br />Types of Economic Systems:<br />
  21. 21. Free Enterprise SystemEncourages individuals to start & operate their own businesses w/out gov’t<br />Risks<br />Potential for business loss or failure <br />Freedoms<br />
  22. 22. Think, Pair, ShareWhat percent of new businesses fail during their 1st year?What is the #1 reason businesses fail?<br />
  23. 23. Choice<br />Ownership<br />Profit<br />Competition<br />Free Enterprise SystemFreedoms: <br />
  24. 24. Where to work<br />what to buy<br /> from whom <br />vote for govtleaders<br />Free Enterprise SystemFreedoms: Choice<br />
  25. 25. Ownership<br />Own your own business and land<br />Free Enterprise SystemFreedoms: Ownership<br />
  26. 26. Profit<br />Money earned after all costs and expenses have been paid<br />Owners get to keep this (rather than give to govt)<br />incentiveto take the risk of running the business (still pay taxes though)<br />revenue<br />Gross income from sales BEFORE costs and expenses<br />expenditures<br />Costs, expenses and taxes incurred on a business in order to operate<br />Free Enterprise SystemFreedoms: Profit<br />
  27. 27. The profit incentive<br />
  28. 28. Competition<br />Struggle for customers between companies<br />Benefits of:<br />Keeps prices low, more choices, better quality, incentive to operate efficiently<br />Free Enterprise SystemFreedoms: Competition<br />
  29. 29.
  30. 30. Price<br />Focuses on price<br />Non-price<br />Focus other than price, ex. Customer service, quality, gift wrap, location<br />Free Enterprise SystemFreedoms: Competition<br />
  31. 31. Pure<br />Infinite amount of competitors (like internet)<br />supply<br />Businesses ability and willingness to sell products<br />demand<br />Consumers ability and willingness to buy products<br />Equilibrium point<br />When demand equals supply<br />Free Enterprise SystemFreedoms: Competition<br />
  32. 32.
  33. 33. Surplus/buyers mkt<br />More supply than demand – keeps prices low <br />Ex. Corn/cornsyrup, homes<br />Shortage/sellers mkt<br />More demand than supply – keeps prices high <br />Ex. Gas, hybrid cars<br />Surplus vs. Shortage<br />
  34. 34. Surplus vs. Shortage<br />
  35. 35. Monopoly<br />One firm controls market for a give product (local phone & cable companies)<br />Free Enterprise SystemFreedoms: Competition<br />
  36. 36. Direct<br />Indirect<br />Free Enterprise SystemFreedoms: Competition<br />vs.<br />vs.<br />
  37. 37. Direct or Indirect Competition?<br />vs.<br />
  38. 38. Direct or Indirect Competition?<br />vs.<br />
  39. 39. Direct or Indirect Competition?<br />vs.<br />
  40. 40. Direct or Indirect Competition?<br />vs.<br />
  41. 41. Direct or Indirect Competition?<br />vs.<br />
  42. 42. Direct or Indirect Competition?<br />vs.<br />
  43. 43. Explain economics<br />Explain how the phases in a business cycle effect SER industries<br />Explain the concept of supply & demand<br />Explain competition as it relates to SER industries<br />Understanding the Economy<br />