Download Economic Systems - Liberty Union High School District

Broad Social Goals
All societies (The US, Cuba,
North Korea, Iran, Spain….)
each seek similar broad social
economic goals.
These Goals Are:
•
•
•
•
•
•
Economic Efficiency
Economic Equality
Economic Freedom
Economic Growth
Economic Security
Economic Stability
However...
They may each have different
definitions and viewpoints with
regards to these goals.
Economic Efficiency
• How well are scarce productive
resources (the factors of production)
are allocated to produce goods and
services.
• For example: Should we develop
alternate fuels?
Economic Equality
• Policies have to be evaluated in terms
of what people think are right or wrong.
• For example: Should the rich get a tax
cut? Is it “fair” to increase the sales
tax?
Different Views of Economic
Equality
• In the United States
and similar economic
systems we look for
equality in
opportunity, does
everyone have the
same chance of
success.
• In other systems such
as Cuba they look for
equality of outcome,
does everyone have
access to health care,
education, housing
etc.
In Europe (Spain)
• As capitalists we agree
more with the US
viewpoint (opportunity
versus outcome) but we
seek to provide some
measure of security with
regards to everyone
having healthcare and
increased access to
education.
Economic Freedom
• The Freedom of
consumers to decide
how to spend or save
their incomes,
freedom to change
jobs or join a union, to
establish businesses
or close them.
Economic Growth
Increasing the production of
goods and services over time.
How can we increase the
standard of living (the satisfaction
of needs and wants) for our
people?
At a minimum...
• The United States
needs to “create”
100,000 new jobs
every month just to
maintain the same
level of employment
given our increasing
population.
Why do we require these jobs?
• The population is
increasing due to
natural increases
• Millions have entered
the nation both legally
and illegally.
Economic Security
Protecting consumers, producers,
and owners of resources from
risks in society
Safety net
• Programs intended to
help individuals and
families experiencing
unfortunate economic
circumstances.
•
•
•
•
•
•
Food Stamps
Unemployment
WIC
SSI
Disability insurance
FEMA
After Katrina the government...
• Temporary housing for
the homeless
• Financial assistance such
including for the
purchases of food and
clothing
• Provided loans to
business owners and
homeowners
• Grants to rebuild
government structures
and underwrite operating
costs
The system is being strained
• Less job security as markets change and
outsourcing increases.
• Companies have stopped offering traditional
pensions and health care
• Unemployment insurance is limited and the
amounts have not increased over time
• People are forced to save toward their own
retirement using IRA’s and 401s many of which
have declined in values.
• Lower housing prices results in lower “overall
savings” for millions.
Government response to the
Current Economic Crisis
• Bailouts to the banking industry
• Bailouts to auto industry
• Renegotiate mortgages and assistance to
families facing foreclosure
• Extended unemployment and increased
benefits
• Job retraining
• The $800 billion “stimulus” plan
Economic Stability
Maintaining stable prices, “full”
employment, stable financial
markets, and the value of our
currency.
Unemployment
• If unemployment increases the
government can adopt policies such as tax
cuts and /or increased public spending to
stimulate the economy.
• If unemployment drops too much which
could cause inflation the government can
tighten money by raising interest rates and
cut government spending.
Desired level of
unemployment
The Federal Reserve Bank (The
FED) is currently using monetary
policies to maintain
unemployment around 4.6%. They
believe if it goes below this level,
companies might compete for
workers driving up wages and
resulting in higher inflation.
Noble Prize in Economics
• One of the past
recipients of the
Nobel Prize in
Economics won it for
explaining the
relationship of
unemployment to
inflation.
Current unemployment
• As a result of the current crisis and even
with fiscal and monetary “intervention” into
the markets, the “official” unemployment
rate is currently in excess of 7.6% in the
US and over 9% in California.
Don’t forget….
Economic Systems are the
methods used by a society to
produce and distribute goods and
services.
Your group project….
Your group project...
• Students will be chosen by random to be
in one of six groups, the leader being the
first student chosen from the hat.
• Each group will select one social goal
• A week from Monday, each group will
present a visual display board and make a
4 to 5 minute presentation on their social
goal
Your display board….
• Should be informative as to defining your
goals and providing and explanation and
examples illustrating it’s importance.
• It should not be a “fidget” board and
please do not make it too “busy”.
Your presentation
• Should try to convince the class as to why
your social goal is the best.
• It should be creative, you can use music,
costumes, visual effects, etc.
• It should impress the teacher
The Free Market
Definition of a market
• A place where a transaction takes place
between a buyer and a seller.
Examples of markets
•
•
•
•
•
Flee market
Fruit market
Stock market
Used car market
Person selling drugs on the corner by 7-11
in Martinez
Why markets exist?
• When was the last time you milked a cow
to get a glass of milk?
• Do you even own a cow?
• Do you make your own clothing?
• Do you slaughter animals to get the meat
you eat?
Therefore, its simple…
• Markets exist because no one is self
sufficient. We all need to acquire goods
and services to satisfy our needs and
wants.
Current Events
Whoops! Hottest Years Were in
1930s
NASA's Error Correction Fuels
Global Warming Skeptics
Specialization
• Concentrating the productive efforts of
individuals and firms on a limited number
of tasks.
Why we specialized
• Is there an advantage in having a brain
surgeon operate on your brain and not a
general MD?
• How long it take for a single individual to
manufacture an auto?
• Lopez teaching Math, English, History, and
Econ?
Key Terms (Again)
• Economic Systems: The method used to produce and
distribute goods and services
• Factor Payments: The income people receive for selling
their factors of production
• Patriotism: Love of one’s country
• Safety Net: Government programs that protect people
experiencing unfortunate economic circumstances
• Standard of Living: How well people are satisfying their
needs and wants (ML)
• Market: A place where a transaction takes place between
a buyer and a seller
More Key Terms
• Incentive: An expectation that encourages
people to behave in a certain way.
• Competition: The struggle amongst producers
for consumer’s dollars
• Laissez faire: The belief that the government
should generally not interfere with business
• Private property: Property owned by individuals
or businesses
• Privatize: To sell a government owned business
Key Terms
• Private property: Property owned by individuals
or businesses
• Voluntary exchange: People are free to decide if
they want to buy or sell in a transaction.
• Profit motive: The desire to improve your relative
well being.
• Gross Domestic Product (GDP) The total value
of all goods and services produced by an
economy.
• Fiscal Policy: Actions taken by the government
to influence the overall economy.
Key Terms
• Monetary Policy: Actions taken by the
federal Reserve Bank (The Fed) to
influence the overall economy.
Still more key terms…
• Profit: The financial gain from a
transaction
• Self-interest: One’s own personal gain
• Consumer sovereignty: The consumer
decides what is produced in a market
economy by voting with their money
• Free enterprise: A system that has private
or corporate ownership of the means of
production (businesses).