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Government and the Economy                           &     International Economics
   Sole Proprietorship- Business owned and    operated by a single personAdvantages            DisadvantagesEasy to start...
   Partnership- Business owned by 2 or    more people who share all decisions               Advantages               Disa...
   Corporation- Business owned by many        who act as a legal entityAdvantages                DisadvantagesEasy to rai...
Corporations raise money in two ways:  ◦ Bonds: Earn interest by lending money to    corporations  ◦ Stocks: Gives stockho...
   Market organizations have five    characteristics that differentiate each    market into one of the four:    ◦ Perfect...
Perfect Competition              Monopolistic CompetitionGreat many sellers               Many sellersSells homogeneous (s...
Oligopoly                           MonopolyThere are few and                   1 dominant firm controlsinterdependent fir...
   Ways of settling business disputes:    ◦ Strike- Employees refuse to work until demands are      met    ◦ Lockout- Clo...
Wage determination can be based onany of the following: ◦ Supply and Demand ◦ Skilled worker vs. Unskilled worker   (Amoun...
The Gross Domestic Product (GDP) measures the   economy’s health and how it is performing The government uses the GDP to d...
   Nominal GDP- Measures the total dollar    amount of final goods and services produced    within the United States   R...
   Consumer Price Index (CPI) shows how the    average price of a certain group of goods    changes over time   Hyperinf...
There are 4 phases in a business cycle:1. Expansion- Economic growth measured by a   rise in real GDP (plenty of jobs, fal...
Contractions can be described in the followingways:1. Recession- Prolonged economic contraction of   at least 6 months2. D...
   The Federal Reserve, considered “the banker’s    bank”, manages and monitors the country’s    economy, regulating the ...
   Monetary Policy- The actions the Federal    Reserve takes to control the nation’s money    supply and interest rates ...
Types of unemployment include:  Frictional- People take time to find a job (laid off,   change jobs, etc.)  Seasonal- Se...
 Countries    trade to take      Tariff- A tax on    advantage of strengths         imported goods    of different count...
 The  government tries to ensure fair business   practices to make sure that one company won’t   create a monopoly. To do...
Types of taxes include:      brought into the1. Excise Tax- Tax on        country   the sale/manufacture 5.   Income Tax- ...
1.   Simplicity- Easy to understand and keep     records of the tax2.   Efficiency- Must be able to pay and collect     wi...
   Exchange Rate- Ratio of value between 2 different    currencies   Protective Tariff- Tax on imported goods to    stre...
   Macroeconomics- The study of countries’    economics, entire industries, and global    interdependence   Standard of ...
Study hard and always follow Coach East’s           directions (or else!)
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Unit 9 and 10 powerpoint

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Unit 9 and 10 powerpoint

  1. 1. Government and the Economy & International Economics
  2. 2.  Sole Proprietorship- Business owned and operated by a single personAdvantages DisadvantagesEasy to start Unlimited liabilityLittle government Limited businessregulation lifeOwner keeps profits Difficult to raise fundsLower taxes Risk of loss is not shared
  3. 3.  Partnership- Business owned by 2 or more people who share all decisions Advantages Disadvantages Easy to start Profits must be shared Little government Limited business life regulation Not difficult to raise Unlimited liability funds Combination of skills Disagreements between owners may occur
  4. 4.  Corporation- Business owned by many who act as a legal entityAdvantages DisadvantagesEasy to raise funds Difficult to startLimited liability Less direct controlUnlimited business life Double taxationRisks are shared Limited activities
  5. 5. Corporations raise money in two ways: ◦ Bonds: Earn interest by lending money to corporations ◦ Stocks: Gives stockholder partial ownership in the corporation Stocks are considered very risky because they don’t guarantee a return on investment
  6. 6.  Market organizations have five characteristics that differentiate each market into one of the four: ◦ Perfect Competition ◦ Monopolistic Competition ◦ Oligopoly ◦ Monopoly
  7. 7. Perfect Competition Monopolistic CompetitionGreat many sellers Many sellersSells homogeneous (similar) Sells differential product (notproducts the same, but can be used as a substitute)Easy to get in and out of Relatively easy to enter industryindustryInformation is complete in Information is reasonablymarket completeNo price control (price taker) Some price controlEx. Gas Stations Ex. Restaurants
  8. 8. Oligopoly MonopolyThere are few and 1 dominant firm controlsinterdependent firms industrySells homogeneous and Sells unique productsdifferential productsIt is difficult to enter and exit Very difficult to enter and exitmarket marketIncomplete information Compete informationPrice control varies in degree Great deal of price controland is often considerableEx. Pure= American steel Ex. Electric powerindustryDifferential=American carindustry
  9. 9.  Ways of settling business disputes: ◦ Strike- Employees refuse to work until demands are met ◦ Lockout- Closing workplace to put pressure on union and workers ◦ Mediation- Third neutral party works to settle disputes between employees (doesn’t have to be accepted) ◦ Arbitration- Third party decides on terms of agreement and it must be accepted by both sides
  10. 10. Wage determination can be based onany of the following: ◦ Supply and Demand ◦ Skilled worker vs. Unskilled worker (Amount of experience) ◦ Blue collar (construction worker) vs. White collar (lawyer)
  11. 11. The Gross Domestic Product (GDP) measures the economy’s health and how it is performing The government uses the GDP to do the following:1. Determine comparisons from year to year in the country2. Determine comparisons with other countries  The GDP is not the “perfect” measuring stick because it doesn’t take into account nonmarket activities of underground economy
  12. 12.  Nominal GDP- Measures the total dollar amount of final goods and services produced within the United States Real GDP- Determines the factors in inflation Per Capita GDP
  13. 13.  Consumer Price Index (CPI) shows how the average price of a certain group of goods changes over time Hyperinflation- inflation out of control (money loses much of its value and leads to total economic collapse)
  14. 14. There are 4 phases in a business cycle:1. Expansion- Economic growth measured by a rise in real GDP (plenty of jobs, falling unemployment rate,2. Peak- Height of economic expansion3. Contraction- Economic decline marked by falling real GDP (unemployment rises)4. Trough- Economy bottoms out where real GDP stops falling
  15. 15. Contractions can be described in the followingways:1. Recession- Prolonged economic contraction of at least 6 months2. Depression- Recession that is especially long and severe3. Stagflation- Decline in real GDP (output) with a rise in inflation
  16. 16.  The Federal Reserve, considered “the banker’s bank”, manages and monitors the country’s economy, regulating the money supply, banking system, and serving the banks What makes up the Reserve is a board of governors who make decisions for the Fed and 12 district banks that are responsible for monitoring and reporting economic and banking conditions
  17. 17.  Monetary Policy- The actions the Federal Reserve takes to control the nation’s money supply and interest rates Fiscal Policy- The use of government spending and taxing to achieve economic objectives
  18. 18. Types of unemployment include:  Frictional- People take time to find a job (laid off, change jobs, etc.)  Seasonal- Season change causes change in production (farmers, ski lodges, swimming pools)  Structural- Caused by mismatch between job seekers and job openings  Cyclical- Rises during economic downturns and falls when economy improves  Full Employment- When there is no cyclical unemployment
  19. 19.  Countries trade to take  Tariff- A tax on advantage of strengths imported goods of different countries  Trade Surplus- When a (Comparative Advantage) country exports more Free Trade- Minimal than it imports restrictions on  Trade Deficit- When a imports/exports to country imports more encourage international than it exports trade  Outsourcing- Export- Good sent to Goods/services being another country supplied by someone Import- Good sent from outside of the another country company/country
  20. 20.  The government tries to ensure fair business practices to make sure that one company won’t create a monopoly. To do this, they have created these anti-trust acts:1. Sherman Anti-Trust Act- Outlaws mergers and monopolies that restrain trade between states (1890)2. Clayton Anti-Trust Act- Outlaws practices that limit competition or lead to a monopoly (1914)3. Robinson-Patman Act- Defines and outlaws several forms of price discrimination (1936)4. Cellar-Kefauver Act- Allows government to stop mergers that hurt competition.  NAFTA- North American Free Trade Agreement- Agreement among Canada, USA, and Mexico
  21. 21. Types of taxes include: brought into the1. Excise Tax- Tax on country the sale/manufacture 5. Income Tax- Tax on of a good (gasoline) individuals or2. Estate Tax- Tax on corporations total value of money 6. Sales Tax- Tax on and property of a goods person who has died 7. Property Tax- Tax on3. Gift Tax- Tax on houses, boats, and money or property cars given to another 8. Corporate Tax- Tax4. Import Tax (Tariff)- on value of Tax on goods corporation’s profits
  22. 22. 1. Simplicity- Easy to understand and keep records of the tax2. Efficiency- Must be able to pay and collect without wasting too much time3. Certainty- Should be clear when, how much, and how it should be paid4. Equity- No one should bear too much or too little of the burden
  23. 23.  Exchange Rate- Ratio of value between 2 different currencies Protective Tariff- Tax on imported goods to strengthen domestic production Specialization- Focusing of labor on a portion of a larger task to increase productivity Competition- When multiple businesses improve quality and/or decrease prices to increase sales Protectionism- Increasing tariffs on imports in order to encourage the purchasing of domestic products Quota- A minimum amount set on production
  24. 24.  Macroeconomics- The study of countries’ economics, entire industries, and global interdependence Standard of Living- Measure of productivity of a nation based on individuals’ lifestyles Stock Market- Place where shares of corporations are bought and sold Interest Rate- The percentage cost of borrowing money Economic Interdependence- The economics of countries worldwide are impacted by the economic conditions in other countries
  25. 25. Study hard and always follow Coach East’s directions (or else!)

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